Eurozone crisis risks global contagion
The Euro sculpture stands in front of the European Central Bank, in Frankfurt, Germany, on Friday, Dec.16, 2011.
The European Central Bank (ECB) has warned that failure to raise the full 200 billion euros ($260 billion) for the IMF's bailout fund for distressed European states could further deepen the debt crisis and risk contagion across the world.
A proposal to lend 200 billion euros to the International Monetary Fund (IMF) to enable it to bail out European countries buffeted by the economic crisis faded on Monday after UK Chancellor of the Exchequer George Osborne told other European finance ministers that Britain would not pay its $38.75billion share.
Britain's refusal to contribute its share came as the ECB warned that contagion from the European debt crisis could afflict other eurozone states and even spread across the globe.
The 17-country bloc's central bank said tensions had now reached the "systemic crisis proportions," the crisis level which in 2008 brought about the collapse of the Lehman Brothers, the fourth largest investment bank in the US (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch).
The ECB criticized European politicians' slow response to the crisis.
"A bumpy ratification process appears to have contributed to additional market uncertainties," the ECB said in its twice-yearly Financial Stability Report.
Earlier this month, European Union leaders agreed to draft a new treaty for more integration in the eurozone, in which members were demanded to lend up to 200 billion euros to the IMF to help it aid eurozone crisis-hit countries.
The eurozone debt crisis, which started in Greece, has now spread to the bloc's third and fourth largest economies, Italy and Spain.