IMF Managing Director Christine Lagarde, right, and Singapore's Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, second left, respond to questions at a news conference after the International Monetary and Financial Committee (IMFC) meeting in Washington, September 24, 2011.
The International Monetary Fund's steering committee endorsed European efforts to resolve the continent's debt crisis, signalling a renewed spirit of co-operation as economic leaders confront the threat of another global recession.
Officials arrived in Washington for meetings this week in dark moods, with many officials, including Finance Minister Jim Flaherty, deeply frustrated by Europe's slow response to growing strains on its banking system.
Financial markets had a terrible week, plunging around the world on worries that the U.S. economic recovery was in jeopardy and that Europe lacked the political resolve to backstop heavily indebted countries such as Greece and Italy.
The discord and inertia among the world's major economies only exacerbated the situation. Ministers and central bankers went out of their way to show they had narrowed their differences, and were in fact prepared to do whatever it takes to stave off a global recession.
"There was a lot of coming together in the room," Christine Lagarde, the IMF's managing director, told a press conference Saturday. "There was no finger pointing. It was about recognition. It was about support."
Ms. Lagarde was talking about her session with the International Monetary and Financial Committee, the group of finance ministers and central bank governors from 24 nations that sets the work agenda for her institution.
The criticism of Europe's handling of the crisis was unusually intense heading into weekend meetings of the IMF and World Bank. The price to ensure against a default by Greece suggested investors assumed bankruptcy was inevitable, and yields on the debt of Italy and other cash-strapped European showed traders were wary others could share in Greece's fate.
For non-Europeans, the issue was that financial volatility in Europe was spilling into other regions, threatening the already weak recovery in the United States and making life difficult in faster growing emerging markets. There was serious doubt that Europeans had the wherewithal to resolve the situation.
China's central bank governor, Zhou Xiaochuan, urged quick action to bring greater financial stability to the European region.
"The sovereign debt crisis in the euro area needs to be resolved promptly to stabilize market confidence, and forceful and credible fiscal consolidation measures are needed in relevant economies to alleviate sovereign debt stress," Mr. Zhou told the IMF days earlier.
At least some of that doubt appears to have receded. European officials said publicly that they were considering ways to expand the scope of their €440-billion rescue fund, perhaps by using the funds to back lending by the European Central Bank, which would have a considerable multiplier effect on Europe's overall financial arsenal.
"We are encouraged by the determination of our euro-area colleagues to do what is needed to resolve the euro-area crisis," the IMFC statement said.
Of course, words will only go so far.
Finance chiefs from the Group of 20 nations, the main body for global economic co-ordination, released a similar statement late Thursday.
The G20 statement was a surprise, reflecting officials' alarm with the cascade in financial markets. The move was met with a mixed reception by economists and traders as the G20 said nothing that wasn't already known. Stock markets stabilized somewhat on Friday, but commodity prices fell again.
"There is some progress here," Bank of Canada Governor Mark Carney told reporters Saturday. However, "in the end, this is about action, not about analysis and plans."
Mr. Carney is one of the more prominent officials pushing for a more muscular response by Europe to the continent's problems. He said Saturday that the euro zone should construct a bailout program worth about €1-trillion. Mr. Carney and others have argued this could be done by using committed funds to backstop lending.