The finance ministers from the world's 20 largest industrial economies said on Saturday that they would make sure the International Monetary Fund (IMF) had the resources it needed to help stabilize the fragile world economy.

"We committed that the IMF must have adequate resources to fulfill its systemic responsibilities," the finance ministers and central bankers said in a joint statement after the conclusion of the two-day meeting in Paris.

France and other countries have pushed for the IMF to play a larger role in combating the eurozone debt crisis. Until now, the IMF has financed about one-third of the bailout monies for Greece, Ireland and Portugal.

The US, however, has been reluctant to support a broader role for the IMF beyond the organization's current involvement in alleviating Europe's debt woes.

"The members of the G20 have a strong interest in supporting Europe, and we will continue to do so through the IMF," US Treasury Secretary Timothy Geithner said.

European officials, meanwhile, informed their G20 partners of a plan to decisively combat the debt crisis. Geithner said that "the plan has the right elements."

"The elements of this plan include a much more substantial financial firewall to ensure that the governments of Europe can borrow at sustainable interest rates as they reform, a broad recapitalization of banks, further support for a sustainable program in Greece and steps toward fiscal union," Geithner said.

A European problem

While Europe "is clearly moving" to deal with the crisis, Geithner went on to say that "the hard part is still ahead, which is to design a strategy that meets those objectives."

German Finance Minister Wolfgang Schäuble agreed the eurozone debt crisis was for Europe to solve, and expressed his confidence that EU leaders would produce a plan at the October 23 summit that would be convincing for financial markets.

Elements of that strategy have become apparent in the past week, with German, French and European officials warning that investors are likely to lose more than the 21 percent on Greek sovereign bonds already agreed on as part of a second bailout for Athens.

Experts say Greece needs to cut its massive debt by around 50 percent to stabilize its finances. Such a cut would have a massive effect on the European banking and financial system by undermining confidence in the debt of other weak eurozone economies.

Calls for bank recapitalization

European officials have said banks must increase their capital buffers, and that they would consider forcing banks to take public funds to recapitalize if the institutions could not quickly raise their core capital ratios using market sources.

Schäuble said Europe would take "clear measures" to prevent the eurozone crisis from spreading.

"That includes providing all system relevant banks with the capital they need," he added.

European banks may need up to 300 billion euros ($415 million) in additional capital by some estimates to weather fully reflecting the distressed value of eurozone bonds in their accounts. On Friday, Standard & Poor's lowered the rating of leading French bank BNP Paribas and warned top French banks they needed to boost capital.

After increasing the European Financial Stability Facility to 440 billion euros, eurozone leaders are now examining ways to boost the bailout fund by up to 2.5 trillion euros.

German Chancellor Angela Merkel meanwhile fired back at Europe's critics, saying non-eurozone countries wanting rapid action should drop their opposition to a financial transaction tax.

On Friday, US President Barack Obama called Merkel to discuss the eurozone crisis and said the two should "stay in close contact" in the runup to the G20 leaders summit early next month in Cannes.

Author: David Levitz, Spencer Kimball (AFP, Retuers, dpa, AP)
Editor: Nicole Goebel