[credit provider=”Todd Ehlers” url=”http://www.flickr.com/photos/eklektikos/278691547/sizes/m/in/photostream/”]
CNBC’s Steve Liesman is reporting that the Treasury has “no intention” of contributiong more money to an IMF-led effort that would help bail out Europe.In fact, CNBC reports, the Treasury says the IMF had intended that European countries would raise their funding to $1 trillion on their own.
This follows reports early today that the IMF will seek $500 billion in additional funds to boost its lending capacity to $1 trillion.
So far, markets have barely reacted to the news.
Plans to boost the capacity of the IMF have been fraught with rumours all day. Initially Bloomberg reported that the fund would attempt to raise $1 trillion. Enthusiasm faded after the initial number was cut in half.
The fact that this money will come from European sovereigns themselves severely diminishes the usefulness of the plan. While few expected that the U.S. would agree to provide more funding, this confirms that Europe will be expected to bail itself out, an effort troubled countries like Italy and Spain will have difficulty taking part in.
And given difficulties last month in encouraging countries like the U.K. to contribute to the fund, the political challenges even inside Europe to increase the IMF’s lending capacity are likely be heated.