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EU ministers to discuss debt crisis

Sept. 16, 2011 at 7:06 AM   |   Comments

WROCLAW, Poland, Sept. 16 (UPI) -- European Union financial leaders arrived in Poland Friday for a debt crisis meeting, with Greece's potential default high on the agenda, ministers said.

At least two ministers expressed doubt a resolution on Greece could be reached during the meeting in Wroclaw, the BBC reported.

Austrian Finance Minister Maria Fekter has refused to rule out an eventual Greek default, saying more bailout money should be advanced to Greece, but "we will have to think about the alternative."

Jutta Urpilainen, Finland's minister, also downplayed the chances of resolving a dispute about whether to provide more money to Greece. Finland wants Greece to put up collateral in exchange for a second bailout.

U.S. Treasury Secretary Timothy Geithner also is attending the meeting. President Obama has urged the eurozone countries to resolve their differences over the debt crisis.

Demands that Greece accelerate its austerity plans, along with fractured support for indebted eurozone members, has sparked financial market mayhem. Greece needs more money quickly, but a review of the country's budget measures won't be finished until the end of September.

Meanwhile, five international central banks decided to provide special loans of U.S. dollars to European banks to try to restore confidence, EUobserver.com reported. The European Central Bank, using dollars traded for euros from the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, will make fixed-rate, three-month loans available in three auctions.

The decision, revealed Thursday, followed a credit ratings downgrade of French lenders Credit Agricole and Societe Generale and a warning on BNP Paribas. The three banks have $3.24 billion exposed in Greek sovereign bonds, rated at junk status.

When announcing the deal in Washington, International Monetary Fund leader Christine Lagarde said, "We have entered into a dangerous phase of the crisis."

"I believe there is a path to recovery, much narrower than before, and getting narrower. To navigate it, we need strong political will across the world," Lagarde said. "Weak growth and weak balance sheets -- of governments, financial institutions, and households -- are feeding negatively on each other, fueling a crisis of confidence and holding back demand, investment, and job creation."

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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