Paris: Europe vowed to its G20 partners on Saturday that it would take swift and decisive action to resolve a debt crisis that is threatening to drag the world economy back into recession. The G20 Finance Chiefs welcomed Europe's efforts but made it clear more needed to be done.
Speaking after a meeting of G20 Finance Ministers and central bankers in Paris, French Finance Minister Francois Baroin said the eurozone would present answers as soon as next weekend, when EU leaders meet for a summit in Brussels.
"The results of the October 23 summit will be decisive," Baroin said. "We are acting resolutely to maintain financial stability."
"We welcome the adoption of the ambitious reform of the European economic governance," a joint statement after the meeting said, noting in particular the move to improve the flexibility of the eurozone rescue fund, the European Financial Stability Facility (EFSF).
"We look forward to further work to maximise the impact of the EFSF in order to avoid contagion, and to the outcome of the European Council on October 23 to decisively address the current challenges through a comprehensive plan," the statement said.
US Treasury Secretary Tim Geithner also said he was heartened by Europe's reassurances.
"We heard encouraging things from our European colleagues in Paris about a new comprehensive plan to deal with the crisis on the continent," Geithner told journalists after the talks.
"The elements of this plan include a much more substantial financial firewall to ensure that the governments of Europe can borrow at sustainable interest rates as they reform, a broad recapitalisation of banks, further support for a sustainable programme in Greece and steps toward fiscal union," he said.
"The plan has the right elements," he said.
G20 nations, which represent 85 percent of the global economy, are seeking to come up with concrete steps to boost growth that their leaders can announce at a summit next month.
Among other measures, the G20 ministers also committed to ensuring the International Monetary Fund has adequate resources to deal with the debt crisis if it continues to spread.
The joint statement said the ministers had agreed that the IMF "must have adequate resources to fulfill its systemic responsibilities," but made no mention of expanding the IMF's resources to deal with the debt crisis.
Developing countries have spoken out in favour of boosting the IMF's firepower in order to help Europe -- something Germany is hesitant about and the United States opposes.
The statement said the issue would be raised again during the November 3 and 4 summit of G20 leaders in the French city of Cannes.
The eurozone is under pressure to quickly come up with convincing measures to tackle the debt crisis, which is spreading to banks and threatens to ensnare major countries such as Italy and Spain, with the EU summit next weekend shaping up to be decisive.
Elements of their strategy have become apparent in the past week, with top officials warning that investors are likely to lose more than the 21 percent on Greek sovereign
bonds already agreed in July as part of a second bailout for Athens.
Experts say Greece needs to cut its massive debt by around 50 percent to stabilise its finances.
That would send shockwaves through the continent's financial and banking system. European officials have warned banks they need to urgently boost their capital buffers -- according to some estimates by up to 300 billion euros (USD 415 billion).
After finally getting approval this week on boosting their European Financial Stability Facility (EFSF) bailout fund to 440 billion euros (USD 600 billion), eurozone leaders are already studying ways to leverage its assets up to 2.5 trillion euros.
The new-look EFSF will be able to inject money into shaky banks or intervene instead of the European Central Bank to support weaker eurozone countries facing problems in raising fresh funds on the markets.
Paris: Europe vowed to its G20 partners on Saturday that it would take swift and decisive action to resolve a debt crisis that is threatening to drag the world economy back into recession.
The G20 Finance Chiefs welcomed Europe's efforts but made it clear more needed to be done.