Leaders seek solutions to eurozone debt crisis at Davos
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Xinhua, January 30, 2012
Slowly, but in progress
Europe's move seems to be a bit slow from outside point of view, but indeed, they are making progress.
The first quarter of 2012 would have been an "extraordinarily taxing quarter" for the debt-laden Union, but according what the President of the European Central Bank Mario Draghi revealed at Davos, through a long list of measures taken by the EU, "we know for sure that we have avoided a major credit crunch, a major funding crisis."
Draghi said that 230 billion euros of bank bonds would come in due during this quarter, on top of the "staggering" refinancing needs of some EU countries, but ECB has managed to pump the same amount of money into the financial system, and saved financial institutions form default.
At the same time, progress was also observed at the epicenter of this crisis, Greece, as a deal on private sector involvement between the Greek government and the private creditor community was about to be closed.
"We are very close, and we have to have a sustainable solution for Greece," said Olli Rehn, Vice-President of the Economic and Monetary Affairs, European Commission.
His voice was echoed by German Finance Minister Wolfgang Schaeuble.
"I don't expect the default of Greece," Schaeuble said. "I am sure that if everybody is ready to deliver what has been agreed, and all the parties of Greece are ready to do it, we will avoid - we can avoid and we will avoid - a default of Greece," he added.
Across the Atlantic
Eurozone's stability is not only a matter vital to the EU, across the Atlantic, the United States also has its stake in it.
In Davos, U.S. Treasury Secretary Timothy Geithner offered his recommendations. In his opinion, the only way for Europe to be successful in holding things and making the monetary union work over the long run, "is for them to build a stronger firewall as a complement to the rest of the comprehensive strategy they have."
That of course requires a bigger commitment of resources -- something which Geithner believes the International Monetary Fund (IMF) can play a supportive and constructive role.
And indeed, that is exactly what the Fund and Managing Director Christine Lagarde was thinking about.
"No one is immune in the current situation," said Largarde, noting that "it's not just the eurozone crisis; it's crisis that could have collateral effects, spillover effects around the world.
"The Europeans have to help themselves even more than they have so far," she said.
