Euro zone divided over increasing size of bailout package

The move which could increase the €440 billion package to trillions of euros is being opposed openly by Germany and some other European countries.

The world leaders, after meeting of the policy setting committee of IMF over the weekend, urged the European nations to take substantial action.

“If you are sitting in the [meeting] and every non-European is saying get it done, it makes quite an impression,” said a participant.

Enlarging bailout package
The rescue fund is called the European Financial Stability Facility (EFSF) and the officials from the IMF and from the Euro zone are considering a variety of options for using to increase the size of the fund.

The head of the European division of the IMF, Antonio Borges, said Sunday that the policy makers are “focused on their own internal restraints, so that we don’t have the outcome that we need.”

But the July 21 agreement requires that any such plan needs to be approved by the legislature of all the 17 euro-zone nations.

The officials from the United States are demanding a quick action to calm world markets but opposition from Germany and some countries from the North European countries means that no resolution is likely to be reached before the meeting of the Group of 20 developing and industrialized countries.

Restraints
The head of the European division of the IMF, Antonio Borges, said Sunday that the policy makers are “focused on their own internal restraints, so that we don’t have the outcome that we need.”

In a closed door meeting, the officials from the euro zone countries have expressed their inability to move ahead too quickly because of the politics at home.

The U.S. Treasury Secretary Tim Geithner stressed on the need for quick action in the closed door meetings.

“The treat of cascading default, bank runs, and catastrophic risk must be taken off the table, as otherwise it will undermine other efforts, both within Europe and globally,” said Geithner Saturday.