Washington - Finance ministers, seeking to prevent another global
recession, increased pressure on European countries to resolve their
debt crisis by coming up with a bold rescue plan, but there were
indications of further divisions ahead over what new actions to take.
Officials from the U.S. and other countries outside of
Europe, concerned at the impact the crisis is having on their own
economies and jittery financial markets, told their European
counterparts time is running short to prevent potential domino-style
defaults in Europe.
"The threat of cascading default, bank runs and
catastrophic risk must be taken off the table," U.S. Treasury Secretary
Timothy Geithner told his colleagues Saturday at the annual meeting of
the International Monetary Fund. "Decisions as to how to conclusively
address the region's problems cannot wait until the crisis gets more
He said European governments needed to join with the
European Central Bank to provide stronger support to calm market fears
and not work at cross purposes.
Mark Carney, the head of Canada's central bank,
suggested "overwhelming" the problem by more than doubling the current
euro rescue fund, increasing its size to 1 trillion euros, an amount
that would equal $1.35 trillion. German Finance Minister Wolfgang
Schaeuble, who leads the eurozone's largest economy, and British
treasury chief George Osborne also indicated they favor boosting the
rescue fund's firepower.
U.S. and global financial markets have experienced
intense volatility in recent days over concerns that Greece is in danger
of defaulting on its debt and that this would put further strains on
major European banks that carry large Greek debt in their books.
The crisis could then drag in other heavily indebted
European nations, including Portugal and Ireland, and even bigger
economies such as Italy and Spain.
The IMF panel, which sets policy for the 187-nation
financial institution, ended its discussions Saturday with a pledge to
work decisively and in a coordinated way to deal with Europe's debt
The IMF statement echoed pledges of increased support
made Thursday by the finance ministers of the Group of 20 major
economies. But both statements were vague on what form additional
support would take.
"Today, we agreed to act decisively to tackle the
dangers confronting the global economy," new IMF Managing Director
Christine Lagarde told reporters at a closing news conference.
The European debt crisis was the first challenge
Lagarde faced as she took over the IMF job in June, but she had grappled
with it before when serving as France's finance minister and thus knows
Lagarde refused to comment on reports that holders of
Greek bonds may be forced to accept bigger losses on their holdings as a
condition by other governments if they are to supply further support to
Greece to meet its debt payments.
She said it was important for the 17 governments that
use the euro to meet the commitments they made in July, when they
decided to give the eurozone bailout fund new pre-emptive powers and
reached a deal on a second bailout for Greece
"It's implementation first and foremost," Lagarde said. "No qualification."
Greek Finance Minister Evangelos Venizelos also ruled
out a debt default, saying Saturday that his country was working hard on
implementing the July decisions.
"Greece is never going to default because that would
have been catastrophic for the euro area and for many other countries
beyond the euro area," he said in a statement.
The three days of discussions wrapped up late Saturday
with a meeting of the Development Committee, which sets policy for the
World Bank President Robert Zoellick announced at a
final news conference that the World Bank planned to triple to $1.88
billion the amount of humanitarian support the bank is providing to
countries in drought-ravaged areas of the Horn of Africa. The World Bank
has estimated that more 13 million people in the region are in need of
humanitarian assistance. Zoellick said the increased support was aimed
at trying to prevent the current humanitarian crisis "should not and
need not be a perpetual crisis."