"Show me the money!" Tom Cruise's exclamation as Jerry McGuire, in the eponymous film of 1996, is now à propos for Europe. The phrase has become part of modern idiom, to demand confirmation that financial backing of a deal is secure. In other words: I'll believe you when I see the money.

Such doubting-Thomas skepticism, always present in markets, has found fertile ground in Europe's failed promises. Just last November, EU leaders announced that, thanks to leverage and other financial engineering, the EFSF's resources were set to levitate to 1 trillion euros. Well, the multiplication of loaves and fishes is no easy feat, and these promises have remained unfulfilled. It's now time to put real money on the table.

If Europe hopes in the help of others (the IMF, the G-20) – and it does so ardently – it must convince them that it has already made the largest possible financial effort itself. This theme runs through all of the Brics' statements, and featured prominently at last week's G-20 sherpa meeting in Mexico City. Europe's partners first want to see a robust EU-funded rescue scheme in place. There are three essential steps to meet this expectation.

First, the current EFSF and its permanent successor (the ESM, or European Stability Mechanism) need to be equipped with adequate fire power. The maximum lending volume of the two joint mechanisms (they are set to run in parallel in the first year, until July 2013) is currently limited to 500 billion euros – a clearly insufficient amount. Prime Minister Mario Monti is reported to favor a doubling of that figure, and the ECB also supports an augmentation.

Moreover, speaking in Berlin on Monday, IMF Managing Director Christine Lagarde could not have been more explicit. In stressing that the EU needs a larger firewall, she added: "Without it, countries like Italy and Spain, that are fundamentally able to repay their debts, could potentially be forced into a solvency crisis by abnormal financing costs," with "disastrous implications for systemic stability."

There is a concrete opportunity to respond to these calls, and it should not be missed. At last December's summit, euro area leaders committed to "reassess the adequacy of the overall ceiling of the ESFS/ESM of 500 billion euros in March 2012." There is no reason to wait until then: the reassessment should be brought forward to the EU Council of late January. An opening appeared to surface at Monday's Eurogroup meeting: it should be seized upon, combining – as a minimum – the remaining resources of the EFSF with those of the ESM, making for a total lending volume of 750 billion euros. In addition, clarification is needed about plans upon the expiry of the EFSF, in mid-2013.

Second, the ESM Treaty provides for a total subscribed capital of 700 billion euros, of which 80 billion euros will be in the form of paid-in capital from euro area members, and the balance of 620 billion euros in the form of callable capital, if and as needed. While the final resulting ratio of 11.4% between paid-in and subscribed capital is higher than that of other similar institutions (at the European Investment Bank, for example, it is 5%), this proportion will be much lower at the start of the mechanism, as capital is to be injected only gradually, in five equal annual installments. Paid-in capital in the first year will thus amount to a mere 16 billion euros, or only 2.5% of total subscribed capital.

Perhaps aware of the insufficiency of this effort, euro area leaders declared at their December summit that they stood ready "to accelerate payments of capital" if needed during the phase-in period. They should do so as soon as possible. Ideally, countries with fiscal space should aim to pay two installments (equal to 40% of the amount due) in 2012. What is feasible will differ among countries, but the guiding principle should be "can pay, will pay." Unfortunately, early indications that Germany stood ready to take the lead are fading, giving way to a wait-and-see attitude in which no country wishes to be the first mover, resulting in collective paralysis.

Finally, Europe must put an end to another lamentable delay: that concerning the provision of additional resources for the IMF of up to 200 billion euros, in the form of bilateral loans from EU central banks. The commitment made on December 9 was to confirm the financing "within ten days." Since then, some 45 days have elapsed, and the wait continues. This just as the IMF has highlighted the need to raise at least $500 billion in additional resources to cope with the crisis. Against this background, the euro leaders' closing plea on the issue rings hollow. "We are looking forward," they said, "to parallel contributions from the international community." With everybody waiting for others and nobody moving, it feels as if we are all watching a drawn-out replay of "Waiting for Godot."

The moment is auspicious: market pressures have been easing, with the spread between Italian and German government securities now hovering around 400 basis points. Europe should seize this moment of relative calm to move decisively on the three fronts mentioned: raising the cap on maximum EFSF/ESM lending to an adequate level; accelerating payments of capital to the permanent ESM, so as to bring forward the new fund's operational effectiveness; and immediately extending the pledged loans to the IMF. The European Council later this month must deliver, and go beyond, the partial openings offered on some of these points at the last Eurogroup meeting.

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