GERMANY and the other strong Eurozone countries must take responsibility for the debts of the weaker states, International Monetary Fund (IMF) boss Christine Lagarde announced yesterday.
The bailout fund needs a “substantial” boost to sooth panicked bond markets and protect countries like Italy, she told an audience in Berlin, whilst also calling for further fiscal integration.
The planned fiscal compact should be implemented alongside “some form of risk sharing” which would stop a fiscal crisis in one country ever again spreading to others, she said.
Lagarde pointed to Eurobonds – shared debts, which Germany rejects – or a debt redemption fund, which would see high-debt countries face even stricter guidance on balancing budgets, as possible solutions.
Meanwhile commissioner Michel Barnier told a London audience he always listens to the City, but there cannot be special rules for the sector – countering David Cameron’s calls in December for safeguards over regulation of the industry.