Top international financial officials called Saturday for collective, decisive action to bring the global economy out of its current dangerous phase both in Europe and worldwide.

"Today we agreed to act decisively to tackle the danger confronting the global economy," the International Monetary Fund's International Monetary and Financial Committee said in a communique after meeting Saturday.

"Our circumstances vary, but our economies and financial systems are closely interlinked. We will therefore act collectively to restore confidence and financial stability, and rekindle global growth."

The IMF also warned that the global economy had "entered a dangerous phase, calling for exceptional vigilance, coordination and readiness to take bold action."

Top of agenda: Euro

The eurozone debt crisis was the main topic for discussion at the IMF's annual meeting. The 17 eurozone member states, under pressure from global financial officials, pledged to do "whatever is necessary" in order to prevent a spread of the debt crisis as markets continued to tumble out of fear that a series of sovereign defaults in Europe could throw the world economy into a renewed recession.

The IMF steering committee said that the eurozone members had vowed to ensure the financial stability of their common euro currency, including implementing the bloc's July decision to "increase the flexibility" of its bailout fund in order to "maximize its impact."

Cascading default

US Treasury Secretary Timothy Geithner urged European nations to cooperate more closely with the European Central Bank (ECB) in order to increase the resources available to shore up indebted nations, such as Portugal, Greece and Ireland.

A default by Athens would burden already strained French and German financial institutions exposed to Greek debt.

"The threat of a cascading default, bank runs and catastrophic risk must be taken off the table," Geithner said. "Decisions as to how to conclusively address the region's problems cannot wait until the crisis gets even more severe."

European officials, meanwhile, have suggested that the EFSF could prove more effective if its resources were leveraged through credit or guarantees by the ECB.

"As one part of the next stage we are contemplating the possibility of leveraging the EFSF resources to have more firepower and thus have a stronger financial firewall to support our member states," EU economic chief Olli Rehn said.

Implementation first

Germany, Europe's largest economy, opposes leveraging as well as renewed economic stimulus to boost flagging demand and common bonds aimed at stabilizing the eurozone's finances by reducing interest rates for highly indebted states.

"You cannot heal an alcoholic by giving him more alcohol," German Finance Minister Wolfgang Schäuble said.

Schäuble went on to say that the eurozone's bailout fund, the European Financial Stability Facility (EFSF), should not be expanded beyond its current 440-billion-euro ($593 billion) overall lending capacity, but instead the instrument should be implemented "as efficiently as possible."

Additional crisis measures could include transitioning from the temporary EFSF to the permanent European Stability Mechanism (ESM) as soon as 2013 in order to calm markets, according to Schäuble.

IMF chief Christine Lagarde said that the focus should be on implementing existing commitments to prevent a debt contagion.

"It is clearly important that commitments that have been made be delivered upon," she said. "It's implementation first and foremost. No qualification."

Author: Spencer Kimball (Reuters, AP, dpa)
Editor: Mark Rossman