Geithner Urges Euro Leaders to Bolster Crisis Fund
U.S. Treasury Secretary Timothy Geithner has warned European leaders that outside support will not be forthcoming until they act to bolster their crisis fund.
“The only way Europe’s going to be successful in holding this together, making monetary union work, is to build a stronger firewall,” Geithner said today in Davos, Switzerland, at the annual meeting of the World Economic Forum. “That’s going to require a bigger commitment of resources.”
Geithner’s call, reinforced by the Washington-based International Monetary Fund, reflects the irritation of many foreign policy makers that Europe hasn’t put up more cash itself to combat the debt crisis. Geithner said the IMF would likely be willing to support rescue efforts in the euro zone, “but not as a substitute for a more effective” domestic response.
While Geithner’s French and Spanish counterparts spoke today about erecting a larger deterrent to ward off speculators, Germany continued to focus on restoring fiscal order.
European officials plan to reassess a planned limit of 500 billion euros on overall rescue lending that will take effect when their permanent bailout program — the European Stability Mechanism — is launched in July, and could use leverage to boost that amount toward a level the IMF and U.S. may deem more satisfactory, but not until March.
IMF Managing Director Christine Lagarde considers the firewall, alongside growth and better integration, as one of the most important areas upon which Europe needs to focus. According to Lagarde, the IMF is already in negotiations with shareholders to raise its lending capacity by $500 billion.
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