Will the IMF Stand Up to Europe?
Until now, the IMF has sycophantically supported each new European initiative to rescue the over-indebted eurozone periphery, committing more than $100 billion to Greece, Portugal, and Ireland so far. Unfortunately, the Fund is risking not only its members’ money, but, ultimately, its own credibility.
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CAMBRIDGE – As the eurozone crisis continues to deepen, the International Monetary Fund may finally be acknowledging the need to reassess its approach. New Managing Director Christine Lagarde’s recent call for forced recapitalization of Europe’s bankrupt banking system is a good start. European officials’ incensed reaction – the banks are fine, they insist, and need only liquidity support – should serve to buttress the Fund’s determination to be sensible about Europe.