(Reuters) – The euro zone is on track to secure approval for modifications to its bailout fund by a summit on October 18, although Slovakia, one of three countries in the 17-country bloc yet to ratify the changes, remains an obstacle.

Slovakia’s finance minister said on Monday its parliament will vote on extending the powers of the 440 billion euro European Financial Stability Fund (EFSF) next week, just days before European leaders meet in Brussels on October 17.

…One option is to turn the EFSF into a bank, so that it would be able to access European Central Bank funds, potentially giving it unlimited liquidity.

Another possibility is for the EFSF to guarantee a portion of any losses on sovereign bonds.

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PG View: Looks like the plan to leverage the ESFS — which buoyed global markets last week — has fallen by the way side. Now it looks like the front-runner is to turn the ESFS into a bad bank; accumulating toxic assets with unlimited liquidity provided by the ECB. What could possibly go wrong?