Factbox: The euro zone's ESM bailout fund

BRUSSELS (Reuters) - Proposals to reform the euro zone's bailout fund are creating a political storm in Italy, where parties and institutions are battling over whether Rome should try to block the reform at the EU level.

Following are facts on the bailout fund, known as the European Stability Mechanism (ESM).

* The ESM bailout fund was set up by euro zone governments at the height of the sovereign debt crisis in 2012 to boost the single currency area's ability to support governments cut off from debt markets.

* The ESM has a subscribed capital of 702 billion euros (£601.43 billion), of which 80 billion euros is paid-in, and 622 billion euros in callable capital. The ESM borrows cheaply on the market against that capital and lends on to governments in trouble.

* It can extend precautionary credit lines to governments running sound economic policies and cheaply lend to countries cut off from markets in exchange for reform programmes.

* The bailout fund can also buy the bonds of a particular government directly at a primary auction or on the market, lend to governments for bank recapitalisation or inject capital directly into a bank under very tight conditions.

* Under reforms currently under discussion, the fund would become the backstop for the EU resolution fund for failing banks. It also might mediate when asked between investors and a government in case of a debt restructuring and would assess a government's ability to repay loans if it asked for a bailout.

(Reporting By Jan Strupczewski; Editing by Toby Chopra)