G20 financial leaders gathering in Paris welcomed the progress the Europe made on the eurozone debt issue on Saturday, but meanwhile expected the euro area to rely more on itself with bigger bailout fund to avoid contagion.

"We welcome the adoption of the ambitious reform of the European economic governance and the completion by the euro area countries of the actions necessary to implement the decisions taken by the Euro Area leaders on 21 July 2011 to increase the capacity and the flexibility of the EFSF," said a communique agreed by finance ministers and central bankers from the 20 leading advanced and emerging economies.

Amid market worries on European banks' solvency and liquidity, the key element to sustain eurozone debt test, the financial leaders agreed to "ensure that banks are adequately capitalized and have sufficient access to funding."

The statement also confirmed the enhanced role of Central banks, saying that they "stand ready to provide liquidity" to commercial banks if required.

Last week, Dexia, the Franco-Belgian lender became the first European bank that has to be split up after it failed to get short-term funding due to concerns over its exposure to Greek sovereign debt. Stocks of European banks have witnessed considerable falls since this summer.

However, the G20 financial leaders left more concrete bailout measures to be made by the one-currency bloc and expected bigger European bailout fund to protect larger economies from following the suit of Greece.

As Slovakia on Thursday approved a plan bolster the European Financial Stability Facility (EFSF), all eurozone member states have ratified to increase the funding and power of the rescue fund.

"We look forward to further work to maximize the impact of the EFSF in order to address contagion," the communique said.

"The first priority here is for Europeans to put their own house in order," said Australian finance minister Wayne Swan.

Supporting the International Monetary Fund as the key international coordinator and dealer with global financial problems, the financial chiefs also indicated that more discussion are needed for structural reform both in developed and emerging economies before the G20 Cannes Summit in November.

"We committed that the IMF must have adequate resources to fulfill its systemic responsibilities and look forward to a discussion of this in Cannes," the communique added.

Go to Forum >>0 Comment(s)