PARIS: Europe goes into a Saturday meeting of the G20 bloc of leading economies seeking to convince its partners that it can tackle a debt crisis that threatens to trigger a global downturn.
Ahead of the meeting of G20 finance ministers and central bank governors pressure mounted on the eurozone to quickly come up with measures to contain the crisis which is spreading to banks and could stall already spluttering growth.
US Treasury Secretary Timothy Geithner said Friday the G20 was looking for a "clear commitment" from Europe, but said he believed the current resources of the IMF and European Union were enough to deal with the debt crisis.
Experts hope that G20 finance ministers and central bankers will inspire EU leaders at a summit next weekend to take the tough decisions to fix the region's crisis once and for all.
"What you need is the clear commitment by the governments, that they will do what is necessary to hold this together and put as much resources behind this as is necessary," Geithner told CNBC television from Paris.
While Europe "is clearly moving" to deal with the crisis, he added: "The hard part is still ahead, which is to design a strategy that meets those objectives."
Elements of that strategy has become apparent in the past week, with German, French and European officials warning that investors are likely to lose more than the 21 percent on Greek sovereign bonds already agreed on as part of a second bailout for Athens.
Experts say Greece needs to cut its massive debt by around 50 percent to stabilise its finances.
That would send shockwaves through the continent's financial and banking system, as much by undermining confidence in the debt of other weak eurozone economies as by the direct Greek losses.
European officials warned banks they needed to urgently boost their capital buffers, and that they would be forced to take public funds to recapitalise if they could not quickly raise their core capital ratios.
European banks may need up to 300 billion euros ($415 million) in additional capital by some estimates to weather fully reflecting the distressed value of eurozone bonds in their accounts.
Nevertheless the meeting of global finance officials in Paris "has boosted optimism that a credible plan may be in the works," said Christopher Vecchio, an analyst at DailyFX in New York.
As a sign of that optimism, the euro firmed sharply against the dollar Friday, standing at at $1.3881 in late New York trading up from $1.3783 at the same time Thursday.
"Clear and decisive action is critical to restoring confidence," Canadian Finance Minister Jim Flaherty said ahead of the meeting.
South African Finance Minister Pravin Gordhan said Europe had been "behind the curve" and that solutions were needed in time for the summit of G20 leaders on November 3 and 4 in Cannes.
"We are looking for assurances from our European colleagues that by the time the summit of the G20 takes place, we will have a clear message that will create confidence," he said.
He warned the resources of the International Monetary Fund and Europe's rescue fund, the European Financial Stability Facility (EFSF), may be "inadequate" if debt contagion spreads further.
But Geithner rejected the notion of beefing up the IMF's resources or turning to other sources.
"As we look at the world today, the IMF has very substantial, uncommitted, available financial resources," he said.
"The problems that they are facing there in Europe are complicated to solve, but well within the resources that Europe has," he added.
German Finance Minister Wolfgang Schaeuble agreed the IMF "has sufficient means to accomplish its mission."
"Europeans must themselves pay the largest part" of the cost of resolving the debt crisis, he added.
After finally getting approval on boosting their EFSF bailout fund to 440 billion euros ($600 billion), eurozone leaders are already studying ways to leverage its funds up to 2.5 billion euros.
The new-look EFSF will be able to inject money into shaky banks or intervene instead of the European Central Bank to support weaker eurozone countries facing problems in raising fresh funds on the markets.
German Chancellor Angela Merkel meanwhile fired back at Europe's critics, saying non-eurozone countries wanting rapid action should drop their opposition to a financial transaction tax.
"It is not possible that those outside the eurozone who are asking Europe to act are at the same time refusing a financial transaction tax," Merkel said in an allusion to, among others, the United States and Britain.
The urgency of the debt crisis -- which has threatened to spread from small economies like those of Greece, Portugal and Ireland to eurozone heavyweights -- was brought home by Standard and Poor's ratings downgrade of Spain this week.
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