The International Monetary Fund managing director Dominique Strauss-Kahn has called on European leaders to produce a more comprehensive solution to the Eurozone debt crisis, claiming the current response has been piecemeal and inadequate.
According to the FT, Strauss-Kahn said that while he believed the Euro was not at risk, there was a need for a more “comprehensive, integrated” plan to shore up finances and calm investor concerns.
With the exception of the bailouts of both Greece and Ireland, the EU has been dependant on large bond purchases by the European Central Bank to reduce borrowing costs for both Spain and Portugal – who are the deemed the two countries now at greatest risk.
Yesterday saw Ireland’s coalition government present its own budget cuts, with the first measures marginally gaining parliamentary approval to implement £5bn worth of cuts.
Speaking in Athens, where Strauss-Kahn was meeting Greek leaders to review their economic restructuring efforts as part of their EU-IMF bail-out, he said: “The Eurozone has to provide a comprehensive solution to this problem,”
“The piecemeal approach, one country after another, is not a good one,” he added.
Strauss-Kahn was speaking a day after a two-day meeting in Brussels with finance ministers. It is believed the meeting ended without consensus on the next response to the crisis. Officials are understood to be divided on proposals to increase the size of the £370bn Eurozone rescue fund or an Italy-Luxembourg plan to introduce a European bond that would enable struggling countries to borrow at a lower rate.