By FX Empire.com
The G20 Summit Begins
Worries about Europe’s debt crisis is the priority on the agenda beginning Saturday at the meeting in Mexico City of G20 finance ministers.
The on going discussions over whether the countries of the European Union have contributed enough to emergency financial stabilization fund to calm the sovereign debt fears continued. The question of a further boost to the effort from the International Monetary Fund (IMF) is likely to be discussed, but not solved, at the weekend’s Mexico City meeting.
Angel Gurria, the head of the Organization for Economic Cooperation and Development, in a keynote speck began by saying an adequate financial stabilization fund would imply about $US1.5 trillion about three time the amount currently committed by European nations, with about half a trillion coming from the IMF.
‘We still have to build the mother of all firewalls,’ Gurria said. ‘The thicker the firewall is, the less likely we’ll have to use it.’
US Treasury Secretary Geithner acknowledged the work of European leaders, saying they have ‘made quite a bit of progress in convincing the world that they are not going to allow a catastrophic financial failure’ in the eurozone.
Geithner also noted, ‘It’s important not to rest on that progress, and recognize that progress is there in part based on the expectation that there are more things to come, more actions to come’ on the financial firewall. ‘They are not done. They know they’ve got more to do,’ Geithner said. He added that leaders had moved ‘slower than some people would like.’ Geithner has continued to prod and push EU leaders to move quickly as the US economic recovery remains fragile and easily influenced by the problems in the EU.
‘I hope that we’ll see, I expect that we’ll see continued efforts by the Europeans … to put in place a stronger, more credible firewall,’ Geithner said, though he didn’t mention any amount.
When asked how big the stabilization firewall should be in an interview with CNBC, Geithner said simply, ‘Bigger than they have today.’
German central bank president Jens Weidmann noted that Euro-area political leaders will meet in March to decide whether to further increase the current 500 billion euro financial stabilization effort, and while he didn’t rule out increased funding, he said money alone won’t do it. Recently, comments and statements from German officials have indicated that Germany way not be ready to commit at the meetings in the beginning of March.
Mexican Treasury Secretary Jose Antonio Meade appeared ready to wait on discussing further IMF funding, noting ‘it’s too soon yet in the process to start discussing specifics on methods and amounts.’
Mexican central bank Governor Agustin Carstens said that the ‘IMF’s lending capacity is an issue that will be discussed’ at Saturday’s meeting among finance ministers and central bankers.
One of the big questions, is where and who will contribute to the enlarged IMF funding.
Originally posted here
