Thursday, January 26, 2012

Merkel opposes increasing rescue fund

German Chancellor Angela Merkel gestures during the opening session of the World Economic Forum annual meeting in Davos, Switzerland on January 25, 2012.

Source: Press TV

German Chancellor Angela Merkel has refused to increase the eurozone's rescue fund, stressing that the key to reassure European markets is to restore lost confidence in the EU governments' policies.

Merkel told the World Economic Forum in Davos, Switzerland on Wednesday that a 'big rethink' was required for the 17-nation zone to act well within the global economy.

The comments come as the International Monetary Fund (IMF) Managing Director, Christine Lagarde has called for the eurozone financial firewall to be reinforced by combining the European Financial Stability Fund and the European Stability Mechanism.

The IMF wants the sum available for eurozone bailouts to grow beyond EUR 500 billion (USD 647 billion).

"Now they say... 'it should be twice as big'," Merkel said.

“'If it were twice as big, we'd believe you'. Some say 'it should even be three times as big, then we'd really believe you.' And I always ask myself how long is that credible and when is that no longer credible,” the German chancellor added.

In its recently published report, 'World economic outlook,' the IMF said it was expecting a recession for the euro countries as they were struggling to overcome their debt crisis.

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.

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