Should the IMF be strengthened to fight Europe’s debt crisis?
At a G20 meeting in Paris, most of the leading emerging market countries, known as the BRICS, are said to back the plan. But US Treasury Secretary Timothy Geithner, attending the finance ministers’ gathering, has poured cold water on the idea.
So why are the BRICS – Brazil, Russia, India, China and South Africa – so keen to come to the euro zone’s rescue?
“They don’t want the euro zone to fail,” said Rob Carnell, chief economist at the banking group ING. “They don’t want the euro zone economy to move backwards. It is in their interests to see a strong euro zone. So rather than them being forced to, I think it is in their own national interest to try and come up, or help come up with, a solution.”
With the two-year-old debt crisis now threatening the world economy, the US is keen to keep pressure on the Europeans to act more decisively. But little of substance is likely to emerge from Saturday’s ongoing talks, with an EU summit later this month set to be the make-or-break moment.