If the IMF were to have its resources ramped up by governments raising their contributions, then it would have more money available to potentially help Europe in dealing with its debt woes.
“More resources means more liquidity which I guess is good for asset prices in the short term, or at least reduces threat of systemic risk in the interim,’’ said Neil MacKinnon, global macro strategist at VTB Capital.
Europe’s debt crisis started in Greece over two years ago and investors will be looking to see if the country can negotiate a deal with its creditors that will ease the burden of its crushing debts.
Last October, Greece’s partners in the eurozone sanctioned a deal whereby Greece’s creditors agree to take a cut in the value of their Greek bond holdings to help lighten the country’s debt burden. The deal with private investors, known as the Private Sector Involvement, or PSI, aims to reduce Greece’s debt by euro100 billion ($127.9 billion) by swapping private creditors’ bonds for new ones with a lower value. It is a key part of a euro130 billion international bailout, the second one for Greece.
Without a deal with its private creditors, Greece has been told it won’t get the next installment of money due from its first bailout. Without that money, Greece would be unable to pay a big bond redemption in March, potentially triggering a chain of events that could derail the global economic recovery and cause financial mayhem in Europe.
“All eyes will once again be on Greece today as talks restart with the IIF today on the voluntary restructuring of the debt with private creditors,’’ said Michael Hewson, markets analyst at CMC Markets.
In Europe, the CAC-40 in France was up 0.4 percent at 3,284 while Germany’s DAX rose 0.5 percent to 6,365. The FTSE 100 index of leading British shares was steady at 5,695.
In the currency markets, the euro remained well-supported as it rebounded off 17-month dollar lows. It was trading 0.7 percent higher at $1.2832.
