Euro crisis could spark 'Lehman-style' global scare: World Bank | WPN World People News

The head of the World Bank, Robert Zoellick, will warn participants at the G20 summit in Mexico that the Euro crisis could spark a Lehman-style global sacre that will have dire consequences for developing nations.

As Greece goes to polls that could determine the future of the eurozone, Zoellick said he would be advising developing nations to keep themselves ready for consequences, The Guardian reports.

"Europe may be able to muddle through but the risk is rising. There could be a Lehmans moment if things are not properly handled," Zoellick said.he election of an anti-austerity government could spark off the most serious crisis for the euro so far, following the failure of a Spanish bank bailout last week.

As all eyes focus on Athens, Zoellick said: "It will be better if they can avoid piling up short-term debts that can come due in volatile periods and look to the fundamentals of future growth - infrastructure and human capital."

Fearing that Europe's sovereign debt problems could have spillover effects, he said the bank had been increasing its lending to support Bulgaria's banking system and acting to prevent a credit crunch in southeast Europe.

Steps were also being taken to protect countries in north Africa that were vulnerable to Europe's debt crisis and trade finance facilities were being strengthened for francophone west Africa, he said.

Several European leaders urged Greeks to stick with the euro, including Spain's Prime Minister Mariano Rajoy and Jean-Claude Juncker, who is Luxembourg's prime minister and head of the group of eurozone finance ministers.

While the World Bank's sister organisation, the IMF, has been more directly involved in the rescue operations for Greece, Ireland and Portugal, Zoellick said that the bank had been monitoring events in Europe carefully.

Source: Europe News.Net