After a weekend of being told by the United States, China and other countries that they must get more aggressive in their crisis response, European officials focused on ways to beef up their existing €440 billion rescue fund. Deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling eurozone member countries.
US Treasury chief Timothy Geithner, in unusually blunt comments, said the risks from Europe were enormous. "The threat of cascading default, bank runs, and catastrophic risk must be taken off the table", he said in speech to the International Monetary Fund on Saturday. Europe came under more pressure on Sunday when a top IMF official said the ECB was the only player big enough to "scare" financial markets, which have punished many eurozone members. "The ECB is the only agent that can really scare the markets", Antonio Borges, the IMF's top official for Europe, told top economic policymakers from around the world.
Olli Rehn said that as soon as the region's governments confirm new powers for the bailout fund -- the European Financial Stability Facility -- attention would turn to how to get more impact from the existing money. The new powers are expected to be ratified by mid-October. Germany's parliament votes this week on them. Germany opposes contributing more money to help countries it sees as profligate, and the focus has now turned to ways to leverage the existing bailout fund, possibly through the ECB. Klaus Regling, who heads Europe's bailout programme, said leveraging the fund's resources did not necessarily need to involve the ECB.
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