IMF presses for euro zone support
Source: Agencies |
January 29, 2012, Sunday
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Print Edition
Print Edition
International Monetary Fund chief Christine Lagarde led a global push yesterday for the euro zone to boost its financial firewall, saying "if it is big enough it will not get used".
Lagarde, supported by the British finance minister, George Osborne, said the IMF could boost its support for the euro zone but pressed its leaders to act first.
Countries beyond the 17-country bloc want to see its members stump up more money before they commit additional resources to the IMF, which this month requested an additional 500 billion euros (US$650 billion) in funding.
"Now is the time - there has been a lot of pressure building in order to see a solution come about," Lagarde told a panel discussion on the economic outlook from which euro zone leaders, most notably Germany, were conspicuously absent.
"It is critical that the euro zone members develop a clear, simple firewall that can operate both to limit the contagion and to provide this sort of act of trust in the euro zone, so that the financing needs of that zone can actually be met," she said.
Lagarde's comments rounded out a crescendo of calls at the Davos Forum for the euro zone to boost its financial defenses. The annual five-day conference began with German Chancellor Angela Merkel deflecting pressure to do so.
In a carefully worded keynote address, Merkel suggested doubling or even tripling the size of the fund may convince markets for a time, but warned that if Germany made a promise that could not be kept, "then Europe is really vulnerable."
On Friday, US Treasury Secretary Timothy Geithner pressed Europe to make a "bigger commitment" to boosting its firewall.
Two bankers who attended meetings with Geithner at the Forum said on Friday the United States was looking for the euro zone to roughly double the size of its firewall to 1.5 trillion euros.
Osborne said the currency bloc must beef up its firewall before other countries increase their funding to the IMF.
"I think the euro zone leaders understand that," said Osborne, the only European minister on the panel discussion on the global outlook in 2012. "There are not going to be further contributions from G20 countries, Britain included, unless we see the color of their money," he added, calling for the euro zone "to provide a significant increase in available resources."
Lagarde, supported by the British finance minister, George Osborne, said the IMF could boost its support for the euro zone but pressed its leaders to act first.
Countries beyond the 17-country bloc want to see its members stump up more money before they commit additional resources to the IMF, which this month requested an additional 500 billion euros (US$650 billion) in funding.
"Now is the time - there has been a lot of pressure building in order to see a solution come about," Lagarde told a panel discussion on the economic outlook from which euro zone leaders, most notably Germany, were conspicuously absent.
"It is critical that the euro zone members develop a clear, simple firewall that can operate both to limit the contagion and to provide this sort of act of trust in the euro zone, so that the financing needs of that zone can actually be met," she said.
Lagarde's comments rounded out a crescendo of calls at the Davos Forum for the euro zone to boost its financial defenses. The annual five-day conference began with German Chancellor Angela Merkel deflecting pressure to do so.
In a carefully worded keynote address, Merkel suggested doubling or even tripling the size of the fund may convince markets for a time, but warned that if Germany made a promise that could not be kept, "then Europe is really vulnerable."
On Friday, US Treasury Secretary Timothy Geithner pressed Europe to make a "bigger commitment" to boosting its firewall.
Two bankers who attended meetings with Geithner at the Forum said on Friday the United States was looking for the euro zone to roughly double the size of its firewall to 1.5 trillion euros.
Osborne said the currency bloc must beef up its firewall before other countries increase their funding to the IMF.
"I think the euro zone leaders understand that," said Osborne, the only European minister on the panel discussion on the global outlook in 2012. "There are not going to be further contributions from G20 countries, Britain included, unless we see the color of their money," he added, calling for the euro zone "to provide a significant increase in available resources."
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