Group of 20 eyes IMF's help for Europe

BY GABRIELE STEINHAUSER

AND SARAH DILORENZO

The Associated Press

PARIS -- The finance chiefs of the world's leading economies opened the door Saturday for the International Monetary Fund to play a bigger role in fighting the eurozone's escalating debt troubles.

The Group of 20 rich and developing nations asked the IMF to propose ways that it could help stop countries under severe market pressure from toppling into a full-blown crisis with potential global repercussions.

The move appeared aimed at Italy and Spain, the eurozone's third and fourth largest economies, which have seen their funding costs spike amid growing worries over the currency union's stability. The rest of Europe cannot afford to bail out Spain or Italy should they run out of money.

Until now, the IMF has funded about a third of the bailouts of Greece, Ireland and Portugal, but helping the eurozone to stem contagion beyond those countries would require a broader use of resources that would go far beyond the fund's traditional role of providing rescue loans to cash-strapped governments.

While acknowledging that the IMF has a role to play in containing the continent's debt problems, G-20 ministers made clear Saturday that Europe must first come up with its own solutions.

"Of course, even though the world has a big stake in Europe doing this effectively, Europe itself has the strongest interest," U.S. Treasury Secretary Timothy Geithner told reporters after the meeting. "I think they've come to recognize that, if you underdo it, it's going to be more expensive."

Eurozone ministers sketched out a plan to their counterparts Saturday and have promised that it will restore confidence in Europe and its banks when they unveil it next weekend.

At their Oct. 23 summit in Brussels, European leaders are expected to sign off on a scheme to maximize the impact of their $600 billion bailout fund, a plan to recapitalize banks across the continent to ensure they can withstand worsening market turmoil, and a second bailout for Greece.