G20 At Work On Second Global Rescue Package

Over the weekend some of the world’s biggest economies worked on a second global rescue package worth nearly $2 trillion. This package will attempt to stop the euro zone debt crisis from affecting the global economy. The G20 says the package will strengthen Europe’s bailout fund. The IMF would then use the money as it sees fit to handle anymore European crisis. The Group of 20 countries are working on this package to convince the financial markets that the European debt crisis can and will be solved.

Many of the G20 members want to see a clear commitment from the euro-zone. British finance minister George Osborn said, “We are prepared to consider IMF resources but only once we see the color of the euro-zone money, and we have not seen the color of the euro-zone money,” in an interview with Sky TV. “I think that quid pro quo will be clearly established here in Mexico City.”

Germany however opposes more public funds used for bailouts. The country has already funded most of the other bailouts since its currently the strongest economy in the euro zone. “The German government’s position is unchanged: we see no need to increase the upper limit of the ESM,” said a German official in Berlin.

Germany appeared to be more agreeable to the idea though at the meeting in Mexico City. “Everyone in the euro zone and even in European Union is reasonably happy with combining the ESM and the EFSF, even Germany, but it is too early to say if this will be decided at the EU summit at the beginning of March,” Margrethe Vestager, economy minister of current EU president Denmark said on Saturday.

As we saw with the recent negotiations in Greece, these deals take a long time to finalize and even when they are supposedly done they can fall apart quickly. The price of oil is another concern that could affect the global economy. Oil producing G20 countries said they would take measures to avoid the price of oil hurting the global economy.