By DESMOND BUTLER, Associated Press
WASHINGTON (AP) — International Monetary Fund chief Christine Lagarde on Wednesday urged the European Central Bank to take further steps to stabilize the eurozone's economy.
Lagarde told reporters that the world economy is experiencing a decline in confidence, driven by doubts about the ability of European and U.S. leaders to manage financial problems. She said European leaders should maintain a "crisis management mode" as they seek to address the debt crisis.
Lagarde's comments come a day before the ECB meets to decide on interest rates. Lagarde noted recent comments by the bank's president, Mario Draghi, to do "whatever it takes" to save the euro.
More can be done," Lagarde said, adding that low inflation allows for more aggressive steps to strengthen the euro.
Draghi has said the ECB could intervene in bond markets and push down high borrowing rates that are threatening heavily indebted governments such as Spain and Italy with financial collapse. But he hasn't said what the bank might do.
High bond market borrowing rates drove Greece, Ireland and Portugal to take bailout loans from the other euro countries in order to keep paying their debts.
Aside from monetary policy, Lagarde said the eurozone needs structural reform to bolster investor confidence in the euro. She called for more centralized supervision of the eurozone banking system and a unitary fiscal policy.
She said that the IMF would keep working with Greece, where leaders of a new fragile coalition government are in talks over further austerity measures needed for Athens to remain in the international loan program that is protecting it from bankruptcy.
Debt monitors from the IMF, ECB and European Union are in Greece for an inspection and are pressing the government to make up for past delays in long-term structural reforms aimed at reducing the size of the public sector.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.