Markets still jittery despite euro bailout reports
Asian markets have fallen further overnight due to nagging uncertainty over the Eurozone debt crisi and despite reports of a possible €3tn bailout package in the pipeline.
Investors were left unimpressed by a commitment at the weekend from G20 finance chiefs that they would take strong, co-ordinated action to avoid another global financial crisis.
The market jitters persist as Europe heads into a crunch week that will be key to the future of the region.
German lawmakers will vote later this week on a beefed-up EU stability fund that will allow debt restructuring, which the Eurozone looks increasingly likely to need.
While EU and IMF experts are due to resume an audit that will decide if Athens can access its latest tranche of rescue funds to escape default.
Share prices tumbled around the world last week amid mounting frustration at the failure of eurozone countries to act to resolve the Greek debt crisis which is threatening global turmoil.
Finance ministers from the G20 nations gathered in Washington for crisis talks were reported to have accepted that Athens would be allowed to default on some of its debts.
A plan to rescue the European single currency, costing €2tn-€3tn, could be revealed within days, according to several reports.
It is believed to involve beefing up the European Financial Stability Facility (EFSF) and an injection of funds into a number of continental banks.
The plans would lead to an orderly default by Greece but allow the country to remain within the eurozone in a bid to relieve some of the economic pressure on Spain and Italy.
After a meeting Saturday of the IMF, the body sought to reassure markets, managing director Christine Lagarde saying there had been a “common diagnosis and a shared sense of common purpose”.
“There was a dialogue and there was a clear response,” she told a press conference, including the IMF ensuring it was “fully involved”.
The situation remained “precarious” however, the IMF noted, and suggested that it may not have the funds to bail out larger eurozone economies if the crisis is allowed to spread.
