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"These moves would help stem the decline in confidence engulfing the region, lower borrowing costs for countries facing severe market pressure, break the downward spiral between sovereigns and banks, and reduce the risk of contagion across the euro area," Pradhan said. Until these measures are introduced, the IMF said the eurozone must continue to use emergency bailout funds and maintain a supportive monetary policy. In addition, it said that those countries that are not under intense market pressure should ease off their austerity measures. Pradhan also expressed the hope that a sharing of debt could eventually be agreed
-- provided strict rules are in place to prevent any one country from abusing the system. Many in the markets think that the creation of eurobonds
-- which would effectively allow countries like Greece and Spain to benefit from Germany's super-low borrowing rates
-- is the ultimate answer to the eurozone's problems. The European Central Bank also came under scrutiny with Pradhan saying that it still has room to cut its main interest rate further from the current record low of 0.75 percent as well as introducing more "unconventional" policies. He said it could step up its program to buy up bonds of Europe's more indebted countries in the markets and pursue a monetary stimulus, similar to what other central banks such as the U.S. Federal Reserve and the Bank of England have enacted.
[Associated Press; By PAN PYLAS]
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