Debt crisis plan wins G20 support

European officials outlined the initiatives they are considering at the meeting in Paris of finance ministers and central bankers from the Group of 20 economies.

With the continent's fiscal woes rattling financial markets and threatening the world economy, governments were urged to complete the plan at their summit in Brussels and to tame the threat of contagion by maximising the firepower of their ?440 billion ($590 billion) bailout fund.

"The plan has the right elements," the US Treasury Secretary, Timothy Geithner, told reporters in Paris. The Bank of Canada governor, Mark Carney, said that "some of what is being considered, if fully implemented, would be sufficient in our opinion".

Policymakers held out the possibility of rewarding European action with more aid from the International Monetary Fund, while remaining split over whether the lender needs a fillip of cash.

"The IMF has a substantial arsenal of financial resources, and we would support further use of those existing resources to supplement a comprehensive, well-designed European strategy alongside a more substantial commitment of European resources," Mr Geithner said.

He said that the US would back more money for the fund only if a "compelling case" was made, as its $US390 billion ($377 billion) war chest is "very, very substantial".

Europe's strategy, which has still to be made public, includes writing down Greek bonds by as much as 50 per cent, establishing a backstop for banks and multiplying the strength of the newly-enhanced European Financial Stability Facility, sources have said.

Optimism the crisis may soon be tamed spurred stocks higher last week and pushed the euro to its biggest gain against the US dollar in more than two years.

Almost two years to the day since Greece set the crisis in motion by announcing it had underestimated its budget deficit, Europe's latest strategy hinges on putting it on a viable path. Austerity measures have plunged Greece deeper into recession and provoked civil unrest that threatens political stability.

Failure to curb the pain has led to Portugal and Ireland requiring bailouts, and markets are now targeting larger debt-strapped nations such as Italy. Investors are concerned that if the crisis is allowed to fester, the world economy could face a repeat of the chaos that followed the 2008 collapse of Lehman Brothers.