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IIF calls for more growth-oriented policies in Europe

04-10-2012 14:32 BJT

WASHINGTON, April 9 (Xinhua) -- Too much austerity in the euro area has contributed to a steep contraction in domestic demand and a fiscal burden sharing would help weaker members to cope with structural reforms, said the world's only global association of financial institutions Monday.

"The emphasis so far on fiscal austerity, while to a degree necessary for the countries facing market funding difficulties, is excessive when carried out across the board," Charles Dallara, chief of the Institute of International Finance (IIF), said in a letter addressed to the International Monetary Fund (IMF) and the World Bank.

On behalf of some 450 major financial institutions worldwide, the IIF advocated that fiscal policies be differentiated between weaker eurozone members and those with surpluses and fiscal flexibility such as Germany "so as to avoid the risk of an austerity overload."

The institute called for a strengthened framework for international policy coordination, which should emphasize a fuller and more active participation of leading emerging markets such as Brazil, China and India.

The IIF, a major negotiator for the private sector in Greece's debt restructuring, also proposed to strengthen Europe's financial firewall.

It was not a "preventative" measure for a pending worse crisis in the near future, but a "reflective" move from the tremendous aftermath of the European sovereign debt crisis, said Dallara at a press conference held before the imminent IMF and World Bank spring meetings scheduled from April 20.

The IIF also noted that risks continued to emanate from oil price increases, deleveraging pressures, and the lingering weaknesses in the U.S. housing market. In addition, Europe's difficulties were having spillover effects on global trade flows and international funding conditions, including trade finance.

Editor:Wang Lingfei |Source: Xinhua

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