This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+201114+Cover+Small

IMF chief calls for larger eurozone bail-out fund

  • Print
  • Comments (1)

The head of the International Monetary Fund Christine Lagarde wants the eurozone to have a larger bail-out fund to prevent the likes of Italy and Spain ending up in default.

Speaking in Berlin, Lagarde (pictured) said that fundamentally solvent countries like Italy and Spain being forced into a financial crisis “would have disastrous implications for systemic stability”.

Lagarde said she would like to see a clear timetable from the eurozone authorities on how to fold the existing European Financial Stability Facility into the new European Stability Mechanism. She would also like to see the size of the fund increased as well as see support garnered from the European Central Bank.

The ESM is set for launch in July and is expected to be around £420bn in size. It has been reported that some leaders, such as Italian prime minister Mario Monti, would like to see the size of the fund doubled. According to the FT, a paper presented to the IMF board implied that the eurozone would need to double its existing £420bn of resources.

The paper is understood to have said that there would be global demand of around £840bn for bail-outs in the next two years and has said the IMF should look to raise half of it.

The IMF is under pressure from the likes of the US and emerging markets shareholders to not lend more money to western Europe until eurozone leaders have found a credible solution to the crisis.

The IMF is set to release its latest global economic forecasts on Tuesday. They are expected to be lower.

Lagarde said: “Even these lower forecasts assume a constructive policy path that is by no means assured.”

  • Print
  • Comments (1)

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Taxbriefs Advantage
Advantage is a digital reference source giving unbiased, independent, answers to your technical queries. Subscribe to Taxbriefs Advantage.

Readers' comments (1)

  • Just how big does this fund have to be in order for it to solve the problems that we can only partly see?

    Unsuitable or offensive? Report this comment

Have your sayEdit my profile/screen name

You must sign in to make a comment

AXA Wealth

The Budget: What do people really know?


Fund Data

Editor's Pick



Poll

Do you think the idea of a single investment management charge could work in practice?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments