Financial leaders of the world’s 20 biggest economies will pledge to make sure banks have enough capital and access to funding, amid market worries about eurozone bank capital needs that threaten a liquidity crunch, a draft communique showed on Sunday. “We will ensure that banks are adequately capitalised and have sufficient access to funding. Central banks have taken decisive actions and will continue to stand ready to provide liquidity to banks as required,” the draft statement said. The world’s leading economies kept the pressure firmly on Europe to sort out its debt crisis.
“We have heard from eurozone colleagues the action they are working on but I think they will have left Paris under no misunderstanding that there is a huge amount of pressure on them to deliver a solution to the crisis,” British finance minister George Osborne said. “(The crisis) remains the epicentre of the world's current economic problems. And the European Council is clearly the moment when people are expecting something quite impressive.”
The G20 will note, however, that they expect a summit of eurozone leaders on October 23 to agree on leveraging of the single currency area’s bailout fund to maximize its firepower and help dispel market concerns by making it big enough to protect Italy and Spain.
“In particular we welcome the adoption of the ambitious reform of the European economic governance and the completion by the euro area countries of the actions necessary to implement the decisions taken by the Euro Area leaders on July 21, 2011 to increase the capacity and the flexibility of the EFSF,” the communique said.
Europe vows swift action
Europe vowed to its G20 partners on Saturday that it would take swift and decisive action to resolve a debt crisis that is threatening to drag the world economy back into recession.
Speaking after a G20 meeting, French finance minister Francois Baroin said the eurozone would present answers as soon as next weekend, at a summit of EU leaders in Brussels. “The results of the October 23 summit will be decisive. We are acting resolutely to maintain financial stability.”
The G20 finance chiefs welcomed Europe’s efforts but made it clear more needed to be done.
Germany’s foreign minister Guido Westerwelle on Sunday lashed out at the US over criticism the eurozone is not doing enough to solve its economic woes, noting that US debt had also contributed to the current crisis.
“Let us not forget that the cause of the current crisis is too much debt in Europe, but also too much debt worldwide,” said Westerwelle. “Therefore, I cannot understand some of the critical comments from our American friends regarding our policy of reducing debt.”