During meetings of the International Monetary Fund in Washington over the weekend, the US and other major nations pressed European leaders to increase the effective size of their €440 billion rescue fund to perhaps trillions of euros by borrowing against it.
The talks are at an early stage, and it is far from clear they can forge a political consensus to act. German officials say the idea is moot as long as the European Central Bank continues to reject it. Some European officials hope the central bank might soften its stance under incoming president Mario Draghi, but his views on the issue aren't known.
US officials are urging quick action to calm the markets, but public opposition from Germany and Northern eurozone countries suggests no agreement is likely before the Group of 20 industrialised and developing economies meet in early November. Policymakers are "focused on their own internal restraints, so that we don't have the outcome that we need", Antonio Borges, head of the IMF's Europe department, said Sunday. While key players were understandably acting in self-interest, he said, it was generating "disastrous" collective results.
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