Liquidity, global growth: no debt fix: World Bank

SYDNEY: Boosting liquidity and hoping for global growth will not resolve debt issues in America and Europe, World Bank President Robert Zoellick said Tuesday, adding these mechanisms had "run their course".

With France's Nicolas Sarkozy due to meet Germany's Angela Merkel on Tuesday over the eurozone debt crisis, Zoellick said European leaders needed to deal with some fundamental and structural economic issues.

He said the European Central Bank, which is buying Italian, Spanish and other stressed eurozone government bonds and helping provide pressed banks with easier funding, was "doing its part".

But he added: "You have to get to the fundamentals".

"I think leaders are going to have to decide will they, as other European leaders have done, find a way to move forward a fiscal union that complements the monetary union," he told journalists in Canberra.

"My key message is that the process of providing liquidity, the process of kind of hoping that global growth is going to get everybody out of this, I think those prospects have run their course and that's what markets are communicating."

Zoellick said while the European decisions were for European leaders to make, he noted that the broader international economy would be affected by the actions they took.

"It's important for both Europeans, and those in the US, to understand others have a stake in this game," he added in the joint press conference with Australian Treasurer Wayne Swan.

"And that while these are European decisions for Europe, that we're part of an international economy and we all have a lot at stake."

He repeated his view that the convergence of debt concerns in the eurozone and the United States had placed world markets in a new danger zone, resulting in the wild volatility of markets seen in recent days.

"Some of the woes over debt in the United States and the eurozone trauma have unleashed a wave of uncertainty about the global economy," he said.

Australian Treasurer Wayne Swan called for resolve, saying the G20 group of nations had made a difference during the global economic crisis.

"The best way we, through the G20 and as individuals, can deal with the situation is with conviction and with resolve," he said.

Copyright AFP (Agence France-Presse), 2011