Progress to fix European debt crisis slows: U.S. official

NEW DELHI (BestGrowthStock) – Europe’s progress in resolving its sovereign debt crisis has eroded slightly due to domestic political resistance and worries over a debt restructuring proposal, a U.S. official said on Monday.

The official, speaking on condition of anonymity, said Germany’s suggestion that a 440 billion euro ($614 billion) European bailout fund be replaced with a debt restructuring mechanism, is being viewed by financial markets as raising the threat of default.

That has pushed up yield spreads for some countries on Europe’s periphery, including Ireland.

The official, speaking on the sidelines of a state visit by U.S. President Barack Obama to India, said Europe has the capacity to resolve sovereign debt problems, but must ensure that the situation does not deteriorate further.

The United States supports the International Monetary Fund’s efforts to promote an agreement among the world’s largest financial centers for common standards on shutting down large failing banks, the official said.

But there remains a big debate over the issue, with some countries wanting to maintain the ability to bail out banks under some circumstances rather than close them, the official added.

(Reporting by David Lawder; Editing by Bryson Hull)

Progress to fix European debt crisis slows: U.S. official