BRUSSELS — The EU's emergency bailout fund — created at the peak of the debt crisis — could be the answer to governments' prayers: a ready-made money pot it could invest in defense.

Powerful figures in the bloc are pushing for the European Stability Mechanism (ESM), worth €422 billion, to move beyond its original role rescuing drowning economies, according to five people with knowledge of the discussions.

It could instead take on the task of distributing cheap loans to buy weapons, one of them said.

As governments increasingly see the need to put the continent on a war footing, the plan would offer a way out for Europe's policymakers who are desperately trying to find cash down the back of the sofa. They know they have to pay for it; they just don't want to.

Other options could see the ESM shift to respond to Russia's aggression more broadly, four of the people said, such as by helping to pay for the reconstruction of Ukraine or by providing cheap loans to countries like the Baltic states which may find their borrowing costs rising.

Russia’s war in Ukraine — a country harboring EU membership ambitions — is grinding into a third year and Donald Trump’s potential return to the White House risks leaving Europe in the lurch, as he demands all NATO countries to hit the target of 2 percent of gross domestic product spent on defense.

But soaring debts in the bloc's most powerful capitals, messy domestic politics, and tight spending rules enforced by the European Commission are limiting the bloc’s ability to cough up additional cash.

The bailout fund idea is still at an early stage. But it could potentially be more palatable to governments than other suggestions for funding defense which haven't yet got off the ground — including finding money in the existing EU budget, using Russian assets immobilized since the start of the war, or collectively issuing joint debt, known as eurobonds.

France and the Baltic states are likely to be at the forefront of supporting the idea, officials say. But other capitals currently insist that it should remain an insurance fund for countries facing a crisis. In their view, it should not adapt to the EU’s changing priorities.

The eurozone's 20 finance ministers would have to agree to any change.

Macron's push

It's an open secret that the EU is looking at ways to repurpose the ESM. While it has distributed loans worth nearly €300 billion to the teetering economies of Greece, Ireland, Portugal and Cyprus, as well as helping Spanish banks, that was around a decade ago and it has done little since.

With the currency bloc much more stable these days, it's become something of a white elephant. A bailout fund without anything to bail out.

Ideas to give it a new role have so far fallen flat though. Last year, Italy vetoed a reform that would have allowed it to also rescue banks.

And its transformation into a defense fund does have powerful backers.

During his landmark speech on the EU in April, French President Emmanuel Macron hinted that the ESM could finance spending in a range of areas — without specifying defense.

Former Italian Prime Minister Enrico Letta suggested in an influential report to EU leaders last month that the fund could hand out loans worth up to 2 percent of a country’s GDP to pay for defense and security.

The fund's head, former Luxembourg Finance Minister Pierre Gramegna, has also floated the idea, suggesting in February that the fund should help out countries that are bearing the brunt of Russia’s aggression.

“If countries have financial difficulties or are about to lose access to financial markets because of the war in Ukraine, well we need to look at … how we can do that,” he said at a conference.

Austerity measures

Unlike the regular EU budget, the bailout fund isn't simply a pot of cash. The loans it disburses are financed by issuing bonds which are guaranteed by a deposit that is paid jointly by eurozone members.

Officials note that Italy’s veto over the reform of the ESM is putting on hold any further discussion on its new function.

The ESM is unpopular in Rome because its loans came on condition of unpopular austerity measures during the sovereign debt crisis.

But refashioning the ESM as a defense instrument could provide a way out for Italy’s right-wing Prime Minister Giorgia Meloni, according to a government official.

Meloni said in January that Italy’s veto could “become an opportunity to transform this instrument into something that is more effective.”

ESM chief Gramegna will present a report on the fund and is expected to discuss the way forward with the eurozone's 20 finance ministers next month. The European Commission is also planning to come up with list of proposals on defense before a leaders' summit also in June.

Barbara Moens contributed reporting.