G20 finance chiefs meeting in Washington have started to draw up a three-pronged plan to save Greece and the eurozone from collapse
The world’s leading economies last night began work on a multi-trillion-euro package to save the eurozone.
G20 finance chiefs meeting in Washington started to draw up a bold plan to expand the European bailout fund in preparation for a Greek default in early November.
Sources close to the summit told The Sunday Times that the US and International Monetary Fund brought pressure to bear on European leaders to resolve the sovereign debt crisis, which last week led to the biggest share price falls since the height of the financial crisis in late 2008.
The three-pronged plan will see vulnerable European banks recapitalised, the €440 billion (£384 billion) bailout fund boosted to as much as €3 trillion and an orderly default of Greece, although the country is to remain within the eurozone.
Speaking from Washington, Gerard Lyons, chief economist and head of global research at the bank Standard Chartered, said leaders were determined to show that when Greece did default, they would be able to stop the crisis spreading.
“The issue is no longer if Greece will default — leaders want to ensure there is the financial firepower to deal with a default and ensure contagion does not spread throughout the eurozone when it happens,” he said.
“This will go a long way to easing the turbulence in the markets. Policy-makers will want to ensure markets have much more money than they will actually need when Greece defaults.”