Wall Street Journal
September 24, 2011
Amid a growing air of desperation, world financial leaders on Saturday said they are scrambling to douse the European debt crisis that threatens to spark another global financial meltdown.
The International Monetary Fund's steering committee agreed at the organization's annual meetings to "act decisively to tackle the dangers confronting the global economy." The IMF committee questioned whether the IMF had sufficient crisis-fighting resources while IMF Managing Director Christine Lagarde said current funding capacity "pales in comparison" to potential lending needs.
European officials, meanwhile, appeared increasingly aware of the risk of a worst-case scenario where Greece defaults on its debt obligations, triggering similar developments in larger, more systemically important countries. Some--but crucially not those from Germany, the region's effective paymaster--said they are looking for ways to leverage its main bailout vehicle, the European Financial Stability Facility.
"There is an increasing political will that we have to get more impact" out of the bailout fund, said European Commissioner for Economic and Monetary Affairs Olli Rehn.
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