Lagarde Urges Larger European Rescue Fund, Recommends Eurobonds

International Monetary Fund Managing Director Christine Lagarde urged European policy makers to increase their bailout fund and share fiscal risks, including through a joint bond, to prevent the region’s debt turmoil from becoming a 1930s-style worldwide depression.

“We need a larger firewall,” Lagarde said in prepared remarks for a speech in Berlin today. “Without it, countries like Italy and Spain, that are fundamentally able to repay their debts, could potentially be forced into a solvency crisis by abnormal financing costs.”