Davos stalemate on EU's IMF funds
Monday 30 January 2012 - by Karina Whalley
During the World Economic Forum meeting in Davos last week, a group of high-powered leaders warned that the eurozone must allocate more of its own money to a financial firewall to prevent its member states' economic problems from contaminating the rest of the region, before it can expect other countries to help.
The US, Japan, China and other countries are being called on to contribute more to the IMF to buttress the firewall. Leaders of the 17-member eurozone have pledged to increase the EFSF cushion, which at the moment has an estimated €250bn in unused funds. However, they have not agreed on the final amount.
Japan's minister for national strategy, economic and fiscal policy said at the Swiss meeting: "Europe must exert the utmost effort, otherwise I don't think that developing countries like China will be so willing to contribute more money to the IMF."
He said Japan had already bought 16 per cent of the EFSF bonds issued so far.
The IMF head, Christine Lagarde retorted that the eurozone crisis is not isolated and could have negative ripple effects globally.
"It's not just a eurozone crisis, it's a crisis that could have collateral effects, spillover effects, around the world," she said.
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