Financial markets move at lightning speeds that contrast sharply with the slowness of the European political process. Whether politicians and financiers can bridge the gap in coming weeks likely to decide the fate of the euro.
The signals coming out of this weekend’s annual meetings of the International Monetary Fund and World Bank were not positive. Bankers and officials alike stepped up pressure on euro area leaders to take bolder and faster steps to prevent the bloc’s sovereign debt problem from spinning out of control. U.S. Treasury Secretary Timothy Geithner urged European governments to “create a firewall against further contagion,” while Bank of Canada Government Mark Carney said governments needed to amass about €1 trillion ($1.35 trillion) in firepower – more than double the bloc’s existing €440 billion bailout facility – to “overwhelm” the crisis.
European officials stuck to their current script, however, insisting that the group needs to focus on ratifying an agreement struck by EU leaders in July to increase the flexibility and effective size of the bailout fund, the European Financial Stability Facility. The German Bundestag is due to vote ....