G20 backs efforts to solve eurozone crisis

Eurozone members attending the G20 summit in Mexico have promised to “take all necessary measures” to save the single currency, euro, a move that has received praise from US President Barack Obama.

“We support the intention to consider concrete steps towards a more integrated financial architecture, encompassing banking supervision, resolution and recapitalisation, and deposit insurance,” a joint statement at the end of the summit said on Tuesday.

Backed by key EU members including Germany, France and Britain, the communique followed two days of talks in which European leaders came under strong pressure to take firm and quick action.

The G20 statement said eurozone members will “take all necessary measures” to stabilise the single currency bloc, including moves to “break the feedback loop” that has weak governments piling on more and more debt to bail out their banks.

Obama welcomed efforts by Europe laid out at the G20 summit in the Mexican resort of Los Cabos to work towards a “more integrated financial architecture” in the 17-nation eurozone.

“I think that what I have heard from European leaders … they understand the stakes, they understand why it is important for them to take bold and decisive action and I am confident they can meet those tests,” Obama said.

“What I have encouraged them to do is to lay out a framework for where they want to go in increasing European integration in resolving the financial pressures that are on sovereign countries.”

Banking integration

The US, the International Monetary Fund and the European Central Bank have all urged greater banking integration in Europe, hoping to instill more confidence as banks falter in some of the worst-hit nations.

Christine Lagarde, the IMF managing director, also acknowledged the European efforts.

“In Los Cabos the seeds of a pan-European recovery plan were planted,” she said.

The G20 summit followed hot on the heels of Sunday’s crucial polls in debt-ridden Greece, where pro-bailout parties won the elections.

The IMF has indicated that it could now be open to a renegotiation of Greece’s 130-billion-euro ($165bn) bailout package.

US officials have called for Greece to be given more time to get its affairs in order, but German Chancellor Angela Merkel remained unmoved.

“Elections cannot call into question the commitments Greece made. We cannot compromise on the reform steps we agreed on,” she told reporters on Monday.

Progress was made in Los Cabos in boosting the resources available to the IMF to help protect vulnerable countries from the backwash of the eurozone crisis.

China led emerging powers in topping up pledges to bring the new pool for emergency loans up to $456bn (361 billion euros), though only in exchange for a greater say in IMF affairs.