Belfast Telegraph

Eurozone pressed to resolve debt crisis

By Stephen Foley and Andrew Grice

World leaders piled pressure on eurozone countries to resolve the area's sovereign debt crisis after a meeting of the International Monetary Fund that revealed more dissent than determination and left financial markets with further troubling news and rumours to digest.

The head of the IMF, Christine Lagarde, was last night due to meet the Greek finance minister, Evangelos Venizelos, to press for further austerity measures aimed at reducing the country's debts, and Mr Venizelos publicly declared that "no Greek paper will ever go uncovered". But behind the scenes, talks about a possible government default were also being stepped up.

Member countries of the IMF said at the weekend that they would act collectively and decisively to get through a "dangerous phase", but the communique contained no new measures and acknowledged the "different national circumstances" of its members.

There was also concern yesterday about whether the IMF had the resources necessary to tackle any fallout from a Greek default, should it trigger a wider financial crisis and threaten the solvency of other, bigger governments.

At the IMF conference, there were sharp differences and sometimes stinging words between the players.

The Swedish Finance Minister, Anders Borg, told reporters "there is some risk of market disappointment due to the fact there were no further, more specific pledges from the euro countries at this time".

And several other members rounded on the European Central Bank, urging it to do more to prevent a Greek default from spreading by supporting the debt of other eurozone countries and strengthening the private banks that stand to lose billions from a default.

what now?

An injection of funds into a number of continental banks is the cornerstone of the three-pronged plan being discussed to save the single currency. The shoring up of banks under a recapitalisation scheme would allow Greece to default on its debt, something leaders have been nervous of because of the potential damage to Europe's banks, which hold billions in Greek debt.

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