by Andrew Peaple
Wall Street Journal
December 14, 2011
Using the International Monetary Fund might not be quite as convenient as European leaders are hoping.
At last week's crisis summit, European countries agreed to provide the IMF with an extra €200 billion ($263.76 billion) via bilateral loans and to finalize the plans in the following 10 days. The details will be crucial. For despite the extra firepower, it's not clear how much of that money can ever end up in the hands of a troubled euro-zone country.
The IMF's assumption is that the extra lending from Europe will be paid into its general reserve account, with €150 billion coming from euro-zone countries and the rest from other European Union nations, channelled through each country's central bank. Once paid into the IMF's general pot, though, the funds could be spent bailing out any country, euro zone or not. Moreover, other countries—notably the U.S., which has an effective veto on IMF decisions—have already expressed qualms about lending a major European country as much as €200 billion. The Greek bailout package, for example, amounted to only €30 billion.
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