Germany welcomed the long-awaited launch of the eurozone's rescue fund, the European Stability Mechanism (ESM), saying it was "a good day for Europe" and "an expression of European solidarity."

After almost two years, the introduction of the new rescue fund "marks the transition from short-term crisis management to long-term stability of the euro area," government spokesman Steffen Seibert said in a press conference.

Finance ministers of the 17-nation eurozone gathered in Luxembourg on Monday, for the formal launch of the ESM and to attend the inaugural board meeting of the new anti-crisis mechanism.

The ESM will act as a crisis firewall with the lending capacity of 500 billion euros (650 billion U.S. dollars) when all eurozone member states put in their contributions. It will also absorb some 200 billion euros from its predecessor, the temporary European Financial Stability Facility (EFSF). In total, there would be 620 billion euros in guarantees and 80 billion euros in cash for bailing out ailing, debt-laden eurozone countries.

Seibert warned that even with new rescue tools in hand, the debt crisis was far from over. "The national financial crises may involve the risk of contagion to other parts of even the entire eurozone," he added.

Seibert also said the the ESM should be used "under strict conditions" -- only countries that have signed the European Union's fiscal pact and committed to financial and structural reforms can access the resources of the new rescue tool.

Germany, the eurozone's economic powerhouse, is the single-largest contributor to the ESM, with nearly 22 billion euros in cash transfers and 168 billion euros in guarantees. The German government's long-held position has been "no reform and budget cuts, no rescue funds."