Global leaders and businessmen urged Europe Monday to take fresh steps to resolve its deepening debt crisis, with a top executive of the IMF warning the continent will see a “downward spiral of collapsing confidence” if no further action is taken. The comments came just days after Standard & Poor's downgraded the credit ratings of nine euro-zone countries, a move which rattled global stock markets Monday on fears that the currency bloc could shatter, triggering a global recession. “Without ... action, Europe will be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs,” David Lipton, first deputy managing director at the International Monetary Fund, told the Fifth Asian Financial Forum in Hong Kong Monday. But “with decisive measures in Europe and global support for Europe, it is possible to avoid a new phase of the crisis,” he added. Lipton urged countries in which inflation has eased to halt monetary tightening to bolster global economic growth, and said Asia should play a bigger role in the IMF. In another ominous setback at the weekend, negotiations on a debt swap by private creditors seen as crucial to avert a Greek default broke up without agreement in Athens, although officials said more talks are likely this week. If Greece cannot persuade banks and insurers to accept voluntary losses on their bond holdings, a second international rescue package for the euro zone's most heavily indebted state will unravel, raising the prospect of bankruptcy in late March, when it has to redeem 14.4 billion euros in maturing debt. In the event of further deterioration in the European crisis, no country or region would be immune, Lipton said, adding that Asia had a huge interest in seeing the problems in Europe resolved. Speaking earlier at the forum, Britain's finance minister George Osborne applauded the progress made by the euro area, although he too said further action was needed.
