G20: onus on eurozone to find crisis solution
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G20: onus on eurozone to find crisis solution

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World financial leaders on Friday urged swift action on the European debt crisis, but stressed that responsibility lay with eurozone politicans to find an immediate solution

Global policymakers yesterday urged swift action to prevent the European debt crisis from escalating into a financial meltdown, but stressed that the onus was on eurozone politicians to find an immediate solution.

G20 ministers and central bank governors’ meeting in Washington, called on eurozone leaders to come up with an effective rescue package within the next few weeks.

The finance ministers had issued an emergency statement on Thursday night pledging support for a solution, but offering no concrete proposals.

But despite mounting pressure on policymakers to announce immediate measures to calm roiled global markets, G20 finance ministers refused to be drawn on the issue at a press conference on Friday evening.

French finance minister Francois Baroin, in response to repeated questions from the global media, said: “We presented a communique yesterday. I am not going to repeat it. What was said yesterday was powerful and important. I have nothing else to add.”

Earlier in the day, policymakers from outside the eurozone member states ratcheted up the pressure.

British chancellor George Osborne said that time was “running out” for eurozone leaders to resolve the sovereign debt crisis. “The eurozone has six weeks to resolve this political crisis,” he said.

“Time is running out for [its leaders]. There is a clear deadline at the [G20] Cannes summit in six weeks’ time.”

Osborne’s Brazilian counterpart, Guido Mantega, called on eurozone politicians to approve a package of enhancements to the European Financial Stability Facility (EFSF) that would enable it to intervene in secondary markets, extend credit lines and create a bank recapitalization facility.

The proposals are currently being voted on by all 17 eurozone member parliaments, with final decisions expected within the next three weeks. But Mantega warned that this timeframe may be too slow.

“It’s a race against time,” he said. “The issue is to call the various European parliaments to be quicker [in approving the package] so that politics can help economics.

“The longer they take, the greater the cost of the assistance package, [and the greater] the possibility that it does not work.”

He added: “Let us not fool ourselves, this is a European crisis that will irradiate the whole world.”

While some have called on fast-growing Bric nations to play a big role in resolving the eurozone crisis, the message from leading emerging market policymakers appeared to be that the solution lies in European hands.

Mexican central bank governor Agustîn Carstens said: “The advanced economies are taking stock of the issues and I think they have put forward important programmes. What is left for emerging markets to do is to mind about their fundamentals.”

Many in Washington this week question global policymakers’ ability to reach a decision.

Gerard Lyons, chief economist at Standard Chartered, said: “The fear is that I don’t feel the same sense of urgency or leadership that we had three years ago.”

He called on the IMF to step up over the weekend and take a decisive policy lead. “The IMF needs to show leadership and recreate the policy co-ordination seen at the London Summit [in 2009]. We need to see decisive action this weekend.”

Carstens hinted that further discussions would take place, but, along with others, was reluctant to be drawn on specifics.

Responding to a critical question suggesting that the G20 response to date had been insufficient at a press conference on Friday, he replied: “We still have meetings, we’ll have them tomorrow and over the weekend, we’ll know what we’ll do then, ok?”

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