PARIS — Europe needs to double the size of its bailout fund to $1.3 trillion if it is to shore up its banking system and stop the spread of its spiraling debt crisis, according to a paper published Thursday by the economic organization that represents developed countries.
The paper, written by Adrian Blundell-Wignall, special adviser to the secretary-general of the Organization for Economic Cooperation and Development, laid out a list of steps Europe has to take “if a fracturing of the euro is to be avoided.”
It includes making sure banks have enough money to weather the storm and forcing them to reduce their holdings of risky assets; making the banking system more secure by separating retail banking — the practice of lending to customers — from investment banking — a riskier business that involves making bets on investments; and forcing Greece’s private bondholders to take at least a 50 percent loss on the debt. The Associated Press
