IMF chief asks for more money to bailout Europe

The head of the International Monetary Fund (IMF), Christine Lagarde, has warned that the IMF may need billions in additional funding to curb the European debt crisis. 

LOS ANGELES, CA (Catholic Online) - The IMF chief has said the $384 billion emergency bailout fund is inadequate to support the troubled European states. She is looking for member nations to contribute additional money.

In a document distributed to the IMF's steering committee over the weekend, Lagarde said, "The fund's credibility, and hence effectiveness, rests on its perceived capacity to cope with worst-case scenarios. Our lending capacity of almost $400 billion looks comfortable today, but pales in comparison with the potential financing needs of vulnerable countries and crisis bystanders."

The need for more money has become apparent as European officials develop a comprehensive plan to stop the debt crisis from worsening. 

Traders have weighed in on the plans by warning the action must be both swift and decisive. Traders are looking for the politicians to develop a comprehensive plan, on which they agree, to resolve the debt crisis. So far, they are worried that the plans currently being discussed by politicians remain ideas and have not yet been agreed to.

Leaders have themselves set a six-week deadline for a resolution to the crisis requesting a resolution by the G20 summit on November 4. 

Despite the need for swift and decisive action, internal division is already forming. In France, the plans to recapitalize the banks have come under criticism, despite the fact that France is the largest holder of French debt. The governor of the Bank of France, Christian Noyer, said that he didn't see any sign French banks were into ruble and that there was no need for recapitalization.

Still, international pressure has continued. Timothy Geithner, the U.S. Treasury Secretary, has called the eurozone crisis, "the most serious risk now confronting the world economy." Guido Mantega, the Brazilian finance minister said that European policymakers had a responsibility to prevent the spread of the debt crisis overseas. And the governor of the Chinese central bank, Zhou Xiaochuan said, "the sovereign debt crisis in the euro area needs to be resolved promptly to stabilize market confidence." 

Early October will be the timeframe for the next significant event in the bailout process. Greece is expected to receive billions in money which planners hope will build stability in a state that has seen very little in the past year.

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