by Paul Hannon
Wall Street Journal
November 8, 2011
As the rain poured down on a disconsolate-looking Cannes on Thursday night, leaders from the Group of 20 largest economies appeared to be edging toward a deal that would supplement the euro zone's own efforts to build a firewall around Italy.
In a series of briefings, French President Nicolas Sarkozy, Russian President Dmitry Medvedev and Argentine finance officials all said an agreement was in sight that would involve providing additional support through the International Monetary Fund.
Even by the standards of increasingly baroque euro-zone rescue mechanisms, what was on the table was complex and difficult to understand.
In their efforts to keep direct contributions from their respective treasuries to a minimum, euro-zone leaders have engaged in financial engineering that would have made any bank alchemist proud. Now they were extending their efforts to magic gold out of thin air to the G-20, proposing a new issue of special drawing rights by the IMF that could be pooled by euro-zone members to boost the European Financial Stability Facility, and which could then be leveraged to help it reach the €1 trillion ($1.37 trillion) target policy makers believe is needed.
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