At this year’s meeting between the International Monetary Fund and the World Bank, which began yesterday, Christine Lagarde, Managing Director of IMF, called for unity between the world’s biggest economies to tackle the financial crisis. Ms Lagarde urged countries to recognise that the crisis will result in a common outcome for each of them, and to start working together towards a recovery starting with the eurozone.
Pressure is being put on the G20 by central bankers and finance ministers to start mending the global economy sooner rather than later by making bolder decisions as, without serious action the situation will get out of control. G20 officials have responded to the demands by promising to stabilize the banking systems and financial markets using any means necessary. They have also outlined how vital it is that quicker actions are made by Europe to help Greece.
Despite the harsh new measures being taken by Greece that were announced earlier this week, some economists are still doubtful that it is enough to inspire confidence in the markets that it will not default. Therefore, it is imperative that the eurozone comes together to help.
However, even after these drastic promises, investors remain uncertain, claiming that actions speak louder than words. Jane Foley at Radiobank has stated that it is unlikely that the markets will steady until politicians make solid movements in resolving the financial crisis as, presently, their words are perceived as unsubstantial. Actions that may stabilise the markets include increasing the eurozone’s communal bailout fund from £385Bn and introducing eurobonds, an idea that has been strongly opposed by Germany.
Chancellor George Osborne has also highlighted the importance of speed in Europe’s decision making, stating that a resolution to the eurozone crisis needs to be decided upon in the next few weeks if the markets are to be eased.
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