LOS ANGELES, CA (Catholic Online) - There's a catch. Any IMF involvement in European rescue packages would be partially underwritten by British taxpayers, which could leave the United Kingdom liable if Italy and Spain fail to repay any international loan.

Britain provides 4.5 per cent of the IMF's funding. Therefore, Britain faces a potential liability to an Italian package of up to €27 billion.

The rescue package by the IMF would involve a country being offered hundreds of billions of euros in return for agreeing to launch a major austerity program to cut spending. A far more flexible arrangement, a credit line gives countries short term access to international finance.

Italy and Spain are likely to be forced to accept some international help as the cost of their debts has risen to unsustainable levels of about seven per cent.

Reports of an IMF rescue package being prepared - denied by an IMF spokesman who said there were "no discussions with Italian authorities," come on the eve as European finance ministers meet to discuss draft plans for a bail-out scheme.

Under the scheme set to be discussed, the euro area's European Financial Stability Facility (EFSF) would have to "insure" bonds of troubled countries by covering the first 30 percent of any unpaid debts.

The European bail-out fund will have to raise €1.4 trillion, a threefold increase compared to the current size of the scheme.

It's still not clear if -- or how this money could be raised, although the EFSF may itself sell bonds to international investors.

European finance ministers from Germany and the Netherlands met this past weekend and disclosed that IMF involvement was under discussion. German Finance Minister Wolfgang Schauble said yesterday he was confident that the euro would be saved, to later become the most stable currency in the world.

The next two weeks is now seen as one of the final opportunities to resolve the crisis because European leaders will meet on December 9 for crunch talks on the package and changes to EU treaties.

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