BRUSSELS — Financial officials from around Europe met Monday in Brussels for urgent talks on how to ease Europe's debt crisis, calm markets and — as one of them put it — "stop the rot."
After a week of economic and political turbulence extraordinary even by the standards of Europe's worsening debt crisis, officials planned to discuss the finances of Greece and Italy. They will try to stop financial contagion by speeding up efforts to give more leverage to their bailout fund, known as the European Financial Stability Facility, or EFSF.
Increasing the firepower of the EFSF has become more challenging since last week, when world leaders at a meeting of the Group of 20 leading economies failed to agree on any additional support or investments from outside the eurozone.
"To my mind, the key to restore and reinforce confidence in Europe as a whole, at least in the euro area, is to solve the sovereign debt crisis and mitigate its impact in the banking sector," ensuring that citizens and businesses can get credit, European Union Monetary Affairs Commissioner Olli Rehn told the European Parliament before the finance ministers' meeting.
"This current financial turbulence is really eroding the foundations of economic growth and employment in Europe," Rehn said. "So the first thing to do in the current situation is to stop the rot."
On his way into the meeting, Greek finance minister Evangelos Venizelos said the country now has a government "of national responsibility" that could implement financial reforms demanded by its international rescue creditors.
Greece's main political parties agreed over the weekend to create a 15-week government tasked with enforcing the terms of the latest €130 billion ($179 billion) rescue package before elections. The parties were still in talks to name a prime minister for the interim administration.
"After a difficult week, we now have a new political situation, a new political frame, in Greece," Venizelos said. "This is the proof of our commitment and our national capacity to implement the program and reconstruct our country."
But Jean-Claude Juncker, prime minister of Luxembourg and chairman of the Eurogroup, said he expected no decision Monday on whether Greece would get the next installment of €8 billion ($11 billion) in bailout money.
"We have some time to discuss this question," Juncker said.
German Finance Minister Wolfgang Schaeuble said that before any decision on the next payment could be made, Greece's two main parties had to make a "binding" commitment that they will implement the terms of the second bailout agreement.
Meanwhile, Italy was also due to get some scrutiny at the meeting. The country has quickly become the main concern for investors in the debt crisis as its government appears unable to push through much-needed reforms. Its financial failure is not an option as its economy would be too expensive to bail out.1 comment on this story
"I have requested further information from the Italian government on the measures of fiscal consolidation and structural reforms," Rehn said. "It's essential now that Italy will stick to its fiscal targets, ensure their implementation and intensify the structural reforms that can boost growth and job creation."
Rehn said the meeting would discuss ways to reinforce the "financial firewalls" that he said are essential to containing the contagion now taking place in Europe.
"We will have a very substantive discussion today and perhaps then as a result of this discussion we will have a consultation of the options and adjust the decisions in the course of November, the last week of November."
At their summit on Oct. 26, eurozone leaders pledged to increase the firepower of the €440 billion EFSF to about €1 trillion, by allowing it to insure the bond issues of wobbly countries such as Italy and Spain and by seeking contributions from outside the eurozone. However, so far, none of the cash-rich emerging markets countries that markets had pinned their hopes on — such as China, Brazil or Russia — have made a commitment to invest and G-20 leaders failed to agree on support from the International Monetary Fund.