G20 focus on euro debt
February 26, 2012
Countries including the United States, Canada and Japan called on the 17 countries that share the European single currency to boost their financial armory in order to slow the debt contagion.
They suggested the bloc merge its temporary European Financial Stability Facility with the permanent European Stability Mechanism, which comes into force in July, to raise a war chest of around 750 billion euros ($1 trillion).
"Every day, the cost of the uncertainty and the cost of indecision is enormous," said Angel Gurria, Secretary General of the Organization for Economic Cooperation and Development. "You can't accuse Europe of being too fast," he observed drily.
US Treasury Secretary Timothy Geithner called for a "strong and credible firewall" to be put in place.
"If they do that then the world will not just be in a position where there will be less risk to growth globally but there will be more oxygen to deal with long-term questions," he said.
But European powerhouse Germany said such proposals made "no economic sense."
German Finance Minister Wolfgang Schäuble insisted that the eurozone had already "done its homework."
"Let me be clear: it doesn't make any economic sense to follow the calls... for endlessly pumping money into the rescue funds, nor for setting up the ECB printing press," Schäuble told a business reception.
"This would create disincentives for countries to continue consolidating and reforming and would not improve the eurozone's economic outlook," he added.
Germany and other European nations are also pressurizing non-European members of the G20 to support an additional $500 billion for the IMF.
dfm/bk (AFP, dpa, Reuters)