EXCLUSIVE - U.S. would back bigger EU stability fund - source

BRUSSELS Thu Dec 2, 2010 12:47am IST

European Union flags are seen outside the European Commission headquarters in Brussels November 27, 2009. REUTERS/Yves Herman/Files

European Union flags are seen outside the European Commission headquarters in Brussels November 27, 2009.

Credit: Reuters/Yves Herman/Files

Related Topics

BRUSSELS (Reuters) - The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.

"There are a lot of people talking about that. I think the European Commission has talked about that," said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund.

"It is up to the Europeans. We will certainly support using the IMF in these circumstances."

"There are obviously some severe market problems," said the official, speaking on condition of anonymity. "In May, it was Greece. This is Ireland and Portugal. If there is contagion that's a huge problem for the global economy."

The remarks foreshadow a visit to Europe this week by a U.S. Treasury envoy who is expected to visit Berlin, Madrid and Paris to hold talks on the ramifications of the debt crisis.

The developments have echoes of the pressure applied by Washington on European capitals last May to create the near $1 trillion EFSF safety net that was last week used to rescue Ireland after its banking crisis spiralled out of control.

The IMF, whose biggest single shareholder is the United States, has committed 250 billion euros to the EFSF.

While reluctant to dictate to Europe how it should address the unfolding debt crisis, the U.S. government is growing concerned about the global fallout of Europe's predicament.

U.S. Treasuries' prices fell and the euro strengthened against the dollar on Wednesday after the news that the United States would be prepared to support an enlarged EFSF.

Germany, whose leaders have expressed frustration at the market backlash against their plans to solve the euro zone's debt problems, does not want to make the stability fund larger.

(Reporting by John O'Donnell; Editing by Ruth Pitchford)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

FCI Revamp

FCI Revamp

Govt begins revamp of Food Corporation of India to cut waste, tame prices  Full Article 

Banking Fraud

Banking Fraud

Govt probing alleged fraud in two state-run bank branches   Full Article 

New Metro Rail

New Metro Rail

Cabinet approves $1.4 bln new metro rail project   Full Article 

Gold Stagnation

Gold Stagnation

Fading volatility promises long period of gold stagnation  Full Article 

Rupee Gains

Rupee Gains

Rupee hits 3-week high on debt-related dollar inflows  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage