The European Union has pledged to bail out any of the countries using the euro if they face a serious crisis rather than have them seek help from the International Monetary Fund.
EU Monetary Affairs Commissioner Joaquin Almunia said: “We are equipped politically and economically to face this crisis,” but he refused to give any details on exactly what Brussels might be able to do. Almunia’s assurance – at a seminar organised by the European Policy Centre think-tank – was made even though EU laws forbid such a bailout within the euro zone. The latest concerns focus on eastern Europe where people are having trouble paying back loans taken out in euros or Swiss francs following the sharp depreciations of their local currencies. Almunia said western banks should make sure their eastern European subsidiaries could operate normally. Almunia spoke as the Organisation for Economic Co-operation and Development warned the global economic downturn will be considerably deeper and longer than even the International Monetary Fund forecast of just a month ago. The OECD’s chief economist Klaus Schmidt-Hebbel said: “I think this quarter will be the worst quarter of all.”