Davos 2012: Rehn calls for IMF funds from UK and US
- 27 January 2012
- From the section Business
The US and UK should provide more cash to the IMF, the European Union's Economic Commissioner, Olli Rehn, has said.
Eurozone states are providing an extra 150bn euros (£125bn; $194bn) to boost its ability to intervene in a crisis.
However, the US and UK have so far refused to make additional contributions.
The UK government has said it wants any increase in resources to involve all G20 nations.
"We need stronger European firewalls, we also need support from our American and British friends in the sense that we need to increase the resources of the IMF," said Mr Rehn at the World Economic Forum (WEF) in Davos.
Mr Rehn stressed Europe also needed to strengthen its own "financial firewalls".
European leaders are meeting on Monday to discuss both a new fiscal treaty and the details of a permanent bailout fund - the European Financial Stability Mechanism (EFSM).
Speaking to the BBC's Stephanie Flanders, the IMF head, Christine Lagarde, said $2tn (£1.28tn) would need to be raised for the eurozone in the next two years.
The money is necessary to provide loans to any eurozone countries that run into difficulty.
She said $1trn had already been raised by the IMF and EU, but a further trillion remained to be raised.
She said she expected half of this extra money to come from EU leaders when they meet on Monday.
The remainder would come from increased funds for the global lender.
"Half could be committed by additional resources from the IMF because the problem is not just within the eurozone. There will be collateral damages if things go wrong outside the eurozone and the IMF is really here for that," she said.
Colour of money
Speaking to British business leaders at the summit, UK Chancellor George Osborne said further UK support for the IMF depended on eurozone leaders establishing their own fund.
"IMF resources to support individual countries cannot be a substitute for further credible steps by the eurozone to support their currency," he said.
"In other words, the world needs to see the colour of their money before it contributes any more."
His US counterpart, Treasury Secretary Timothy Geithner, suggested his country and others such as China may be prepared to contribute more if certain conditions were met.
"If Europe is able to find the political will to build a more effective firewall then you are going to see the IMF, the major shareholders in the IMF and emerging economies very supportive of those efforts," said Mr Geithner.