Tuesday, June 12, 2012

IMF Head Warns Time Running Out for Euro Zone

June 12, 2012

As the focus of the euro crisis shifts to Italy, IMF head Christine Lagarde has warned that European leaders have less than three months to save the euro. Meanwhile top economist Nouriel Roubini has called on Berlin to drop its obsession with austerity, proposing that the German government give every household a 1,000 euro voucher to spend on a vacation in Southern Europe.

As the clock ticks down to Greece's crunch election on June 17, which is being seen as a referendum on the country's membership of the euro zone, the warnings that European leaders need to act to prevent a collapse of the currency union are getting stronger by the day.

Now, Christine Lagarde, head of the International Monetary Fund (IMF), has warned that the euro zone has less than three months to get its act together. In an interview broadcast on Monday evening, Lagarde told the television station CNN that action to save the euro is needed in "more shortly (sic) than three months." She was referring to a recent prediction by billionaire investor George Soros that Europe has three months to save the euro.

"The construction of the euro zone has taken time," Lagarde told CNN. "And it's a work in construction at the moment."

The IMF head declined to comment on whether Greece would leave the euro zone. "It's going to be a question of political determination and drive," she said. Many observers fear that Greece will have to return to the drachma if the left-wing anti-austerity Syriza party wins Sunday's election.


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