Christine Lagarde, the head of the International Monetary Fund, has warned that the European sovereign debt crisis could plunge the global economy into what is already being referred to as a "lost decade".
Speaking at a financial forum in Beijing, Lagarde said efforts to find a solution to the crisis were “a step” in the right direction, but that not enough was being done to restore confidence, the BBC reported.
Lagarde called on richer nations to make it their mission to restore confidence and growth, and she urged Beijing to rebalance its economy:
"Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand."
Lagarde added that the outlook for the world economy was uncertain, with “clouds on the horizon” - particularly for advanced economies in Europe and for the United States.
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The former French finance minister's was on Wednesday at the start of a two-day visit to China, which is expected to focus on efforts to contain the European crisis, Reuters reported.
Lagarde is reportedly looking for outside investment to boost Europe's bailout fund, the European Financial Stability Facility, to 1 trillion euros.