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Merkel's spokesman, Steffen Seibert, told reporters that Germany does not currently see the need to increase ESM funding, but did say that the chancellor was "prepared to talk about whatever our European partners bring to the negotiating table in Brussels." On Sunday, Finance Minister Wolfgang Schaeuble brushed aside a question about the possibility of beefing up the ESM. Schaeuble pointed to decisions made by eurozone leaders at a summit in early December. "They said that we will reappraise it (the fund) in March, and we are going to take that time," he told ARD television. Eurozone countries are currently thrashing out details of a budget-discipline pact, or "fiscal compact," championed by Berlin. Lagarde identified a need for it to go further. "To complement its 'fiscal compact,' the area needs some form of fiscal risk-sharing," she said, pointing to "a number of financing options" such as jointly issued eurobonds or a debt redemption fund. "Political agreement on a joint bond to underpin risk sharing would help convince markets of the future viability of European economic and monetary union," Lagarde added. Merkel has fiercely resisted eurobonds, which are deeply unpopular in her center-right coalition, because they could drive up Germany's borrowing costs. Lagarde said that she understands both the pain felt by those in European countries that have to make deep cuts and the feelings of those in countries that have been thrifty and are now being asked to help. "But what we must all understand is that this is a defining moment," she said. "It is not about saving any one country or region. It is about saving the world from a downward economic spiral. It is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand."
[Associated
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