In a G20 communique issued on Friday, leaders set a six-week deadline to resolve the crisis – to unveil a solution by the G20 summit in Cannes on November 4.
However, already the plans to recapitalise European banks have been criticised in France – which has the biggest exposure to Greek debt.
The governor of the Bank of France, Christian Noyer, told reporters yesterday he didn’t “see any sign” that French banks were in trouble and that he believed there was “no need” for a recapitalisation.
But international pressure on European politicians has intensified.
Timothy Geithner, the US Treasury Secretary who proposed an increase to the EFSF at the Ecofin meeting on September 16, said that the sovereign debt pressures and banking strains in Europe were “the most serious risk now confronting the world economy”. Larry Summers, Barack Obama’s former chief economic adviser who was attending his 20th IMF meeting, said: “I have not been at a prior meeting at which matters have had more gravity.”
Demands for action were also made by emerging market leaders. Brazil’s finance minister, Guido Mantega, said European policymakers had a responsibility “to ensure that their actions stop contagion beyond the euro periphery”.
The governor of the Chinese central bank, Zhou Xiaochuan, said that “the sovereign debt crisis in the euro area needs to be resolved promptly to stabilise market confidence”.
With Greece facing a debt deadline at the beginning of October, the first priority is to release an €8bn tranche of bail-out money. Ms Lagarde said that the priority of international authorities this week must be “implementation, implementation, implementation” of the bail-out agreement of July 21.