Carney urges immediate Europe debt action

Wed Nov 23, 2011 6:50pm EST
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By Louise Egan

MONTREAL (Reuters) - European leaders need to act "this week, not next year" to fix their debt crisis, Bank of Canada Governor Mark Carney said on Wednesday as fears grew that the crisis is starting to hit the big economies of Germany and France.

In a stiff warning that described the sovereign debt crisis in Europe as "barely contained," Carney said the euro zone has the resources needed to clean up the mess, but has not provided enough details on how it plans to put those resources to use.

"They have the means, they have the solutions, but they have to act on them, and act on them this week, not next year," Carney told reporters in Montreal following a speech.

"European authorities need to put in place a mechanism to ensure that all countries in Europe can finance at sustainable rates while they undergo a period of adjustments in those countries - budgetary, structural adjustments."

Carney, who is also the chairman of the Financial Stability Board, the G20 body overseeing the reform of financial regulations, said it was up to the Europeans to decide how big a role they give to the European Central Bank in alleviating funding problems.

A botched sale of German benchmark bonds on Wednesday sparked fears the debt crisis was beginning to threaten even Europe's biggest economy.

Stock markets across the world to slid to six-week lows, while the euro fell to its weakest level since October 6.

Countries outside Europe, including Canada, are growing increasingly impatient as the dithering of euro zone politicians undermines confidence in the global economy.   Continued...