Europe should boost bailout fund, consider euro bonds: Lagarde
By Noah Barkin
BERLIN (Reuters) - The head of the IMF called on European governments to boost the size of their rescue fund and consider financial risk-sharing steps like common euro zone bonds as a way out of their sovereign debt crisis.
In a speech at the German Council on Foreign Relations in Berlin on Monday, International Monetary Fund (IMF) Managing Director Christine Lagarde said the world economy faced a "defining moment" that required quick, collective action.
To help meet the challenge, she urged leading powers to back an increase in resources for the Washington-based lender to help fill a global financing hole that the IMF believes could reach $1 trillion over the coming years.
"The longer we wait, the worse it will get. The only solution is to move forward together," Lagarde said, according to an embargoed copy of her remarks provided by the IMF before delivery.
"We must all understand that this is a defining moment. It is not about saving any one country or region. It is about saving the world from a downward economic spiral."
The IMF has helped fund a series of euro zone bailouts over the past two years, but with big European countries like Italy now under threat, it wants to boost its lending capacity, currently estimated at around $380 billion.
Members of the single currency bloc have agreed to inject close to $200 billion, but countries like the United States, Canada, China and Japan have been cool on channeling more funds to the IMF. Many are keen for Europe to take more decisive steps to resolve its debt crisis first.
Lagarde said the IMF was seeking to increase its lending resources by up to $500 billion, including the funds already pledged by Europe. The Fund estimates that up to $1 trillion in global financing could be needed over the coming years. Continued...