David Lipton, First Deputy Managing Director of International Monetary Fund (file photo)
Source: Press TV
A senior IMF executive has warned that the eurozone could fall into a “downward spiral” of collapsing confidence, stagnant growth, and fewer job, if it fails to get its governance in order.
The International Monetary Fund first Deputy Managing Director David Lipton also said that the European outlook is grim and risks for the global economy are high.
"At the global level, the pace of economic activity is weakening, and the risks for Europe and the world are high," Lipton added on Monday.
Pledging to strengthen ties with Asian governments to minimize spillover risks of the European debt crisis, Lipton called for stronger ties between Asia and the IMF. He added that no country and no region would be immune to the catastrophe.
Lipton's remarks prompted European banks to put away record sums of money in the European Central Bank.
Lipton's comments comes after US-based ratings agency Standard and Poor's downgraded the sovereign credit ratings of nine eurozone countries on Friday, including top-rated France and Austria.
Europe plunged into financial crisis in early 2010. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.
There are fears that more delays in resolving the eurozone debt crisis, which began in Greece in late 2009 and infected Italy, Spain and France last year, could push not only Europe but also much of the rest of the developed world back into recession.