The International Monetary Fund has increased the amount of money to be used if the euro crisis worsens. However, in spite of the huge amounts of money which are being spent, the desired objective is unlikely to be achieved, The Wall Street Journal writes.

At first, all across Europe finances are being squeezed in an attempt to meet targets for budget deficits set by the European Union. Instead of trying to stimulate growth, European fiscal policies are focusing on deficit reduction. This depresses already sluggish economies, thus reducing tax revenues flowing into these governments’ coffers. As a consequence, fewer funds are left to pay down existing debts.

Second, countries which are supposed to be banded together and support each other are unwilling to do that. Rich countries like Germany simply do not want to bail out indebted ones – Spain, Italy or Greece.

And third, a common currency can not work successfully if there is no common economic policy. To achieve such an objective would require the nations that use this currency to give up their sovereignty to a central government with the power to legislate and enforce common fiscal and monetary policies. The euro zone never had such a centralized authority and lacks one to this day.

Considering all these factors, it is possible that eurozone’s collapse may well be measured in months, not years.

Ref: 110.110.110.731