Eurozone needs ‘mother of all firewalls’, says OECD
The eurozone needs “the mother of all firewalls” if it is to protect the EU’s single currency from debt contagion, the Organisation for Economic Co-operation and Development (OECD) has warned.
By Bruno Waterfield
27 Mar 2012
Angel Gurria, OECD’s secretary general, urged EU finance ministers meeting in Copenhagen on Friday to increase the eurozone’s bailout fund to at least €1 trillion (£835bn).
“Weak financial conditions, fiscal consolidation and economic adjustment are restricting demand in the short-term before the long-term benefits on stability and growth are felt,” he said. “Decisive action to restore confidence and support demand is needed now.”
Germany is trying to hold down any increase to €700bn but Mr Gurria stressed a big fund, the bigger the better, would be needed to fight a eurozone crisis that is not yet over.
“When dealing with markets you must overshoot expectations,” he said. “The mother of all firewalls should be in place, strong enough, broad enough, deep enough, tall enough, just big.”
The International Monetary Fund has made the increase the pre-condition of increasing its resources to provide credit lines to the euro area, which is facing turbulence on the bond markets.