Europe needs to take a preventive approach in tackling its sovereign debt crisis and must increase its defenses to restore investor confidence, European Union Economic and Monetary Affairs Commissioner Olli Rehn said.
With “financial firewalls, it is much better to take a preventive approach,” Rehn told reporters after a meeting of finance officials from the 20 biggest economies in Mexico City today. “Prevention is always better than correction. As we have a large enough financial firewall, we are much more convincingly able to contain market turbulence that might occur.”
European leaders will conclude whether the region’s permanent rescue fund should be increased “in the course of March,” German Finance Minister Wolfgang Schaeuble said yesterday. That’s an “essential” prerequisite for any decision to increase funds for the International Monetary Fund, G-20 officials said in a statement.
“I’m confident that we will come to a positive conclusion,” Rehn said. “There is a convergence in the views of the G-20 that there is an urgency to reassess global firewalls.”
U.S. Treasury Secretary Timothy F. Geithner said he’s “encouraged” by Europe’s progress in containing its debt crisis. The G-20, at a “successful working meeting,” set a “clear goal” of deciding on global firewalls by the IMF’s spring meeting in Washington in April, ECB Executive Board member Joerg Asmussen told reporters.
“Over the last 48 hours I sensed a more positive atmosphere among our partners,” Rehn said. “Our actions are recognized as appropriate and effective.”
Market pressures are easing “particularly for the so-called vulnerable countries Italy and Spain,” Rehn said. At the same time, Ireland is “on track” in implementing its reform package and “can expect to return to the markets next year.”