Eurozone must act before Greek crisis leads to global meltdown, IMF warns

Guardian
June 20, 2011

The International Monetary Fund (IMF) has expressed its growing concern about the deepening crisis in Greece, stressing that a failure by the European Union to take decisive action could lead to a domino effect through the single-currency zone and result in a second global financial meltdown.

In its starkest warning yet that Greece has the potential to replicate the system-wide shock triggered by the collapse of Lehman Brothers in September 2008, the IMF told Europe's policymakers to stop squabbling over the terms of a bailout and act immediately to prevent contagion.

"While courageous attempts have been made to address the crisis, policymakers are yet again facing uncomfortable dilemmas, raising uncertainty about the final outcome," the fund said in its annual health check on the eurozone.

"With deeply intertwined fiscal and financial problems, failure to undertake decisive action could rapidly spread the tensions to the core of the euro area and result in large global spillovers."

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