OECD warns euro crisis needs bigger response

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OECD warns euro crisis needs bigger response

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Eurozone finance ministers need to impress finance markets with the size of their rescue fund for indebted countries when they meet later this week according to Angel Gurria, the head of the Organisation for Economic Co-operation and Development.

He said that is because the eurozone’s public debt crisis is not over, despite calmer financial markets.

The OECD has warned the region’s banks remain weak, debt levels are still rising and governments’ fiscal targets are far from assured.

“The mother of all firewalls should be in place, strong enough, broad enough, deep enough, tall enough, just big,” Gurria said, as he presented the economic think tank’s latest report in Brussels.

At their meeting this week eurozone finance ministers are expected to agree on combining the European Financial Stability Facility (EFSF) with its permanent European Stability Mechanism (ESM).

Those are the two rescue funds for the 17-nation currency area.

German Chancellor Angela Merkel signalled for the first time on Monday that she was prepared to consider boosting the firewall’s resources.

As the bloc’s economy flounders for the second time in just three years, the OECD said in a report the 17-nation area needed ambitious economic reforms and there could be no room for complacency.

On the region’s economic future, the OECD was more upbeat than the International Monetary Fund and the European Commission; it sees 0.2 percent growth in the bloc this year, rather than an outright contraction.