The US has been reluctant to add more resources to IMF coffers to support Europe before the continent increased its own bailout fund. Earlier this week, the European Financial Stability Fund was boosted to $1 trillion.
Giving a speech in Washington yesterday, Lagarde (pictured) says the economic recovery is under threat from rising oil prices, high unemployment and Europe’s economic problems, and that the US would not be spared if it falters.
She says the exposure of the US economy to Europe and the rest of the world means whatever happens to the recovery outside of the US will have a real impact on its domestic economy.
“We can provide a circle of protection against global turbulence, and help members adjust to changing circumstances with minimal disruption. But to do this effectively in today’s world, we need more resources. (article continues below)
“If the European economy falters, the American recovery and American jobs would be in jeopardy. So America has a large stake in how Europe fares, and how the world fares.”