IMF chief Christine Lagarde met euro area officials in Luxembourg as Greece was seeking to revise its bailout terms, and Spain was preparing to request aid to shore up its banks while it struggled, along with Italy, with soaring borrowing costs.
"We are clearly seeing additional tensions applying to both banks and sovereigns," Lagarde said, calling for "determined and forceful moves" that should "restore faith in the (European monetary) system," whose feasibility was being "questioned."
The IMF urged "a more creative and inventive monetary policy" that might involve a reactivation of the ECB's bond-buying programme, which last year helped contain a surge in Italian and Spanish bond yields.
ECB President Mario Draghi was present in Luxembourg, but did not appear before reporters to respond to Lagarde's comments.
In a news conference, Lagarde slammed plans to rescue the Spanish banking sector via loans to the Madrid government, a move that has spooked markets because it will increase the country's debt.
"Clearly the preference of the IMF ... is to try to break this negative loop between banks and sovereigns," she said, calling for aid to be given directly to banks. "We certainly hope that wisdom can prevail."
Two independent audits commissioned by the Spanish government showed Thursday that the country's lenders have recapitalization needs of up to 62 billion euros (79 billion dollars).
Two weeks ago, eurozone partners said they could provide as much as 100 billion euros. But in Luxembourg, Spain's Economy Minister Luis de Guindos said he was not yet ready to make an official application.
"This is not a simple process. It starts now and has to be completed in the next days," he said. A complete "road map" would be available in late July, when more detailed bank stress tests will be published, he added.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs eurozone finance ministers' discussions, said the Spanish aid request would come "by next Monday." French Finance Minister Pierre Moscovici said it would be presented Friday.
The eurozone loan for Spain should be approved at the next meeting of the Eurogroup panel of eurozone finance ministers on July 9, EU Economy Commissioner Olli Rehn said.
Money would be provided by the current euro rescue fund, the European Financial Stability Facility (EFSF), until its replacement, the European Stability Mechanism (ESM), comes on line, Juncker and Rehn indicated.
Investors have been fretting about the use of the ESM or the EFSF, as the former enjoys preferred creditor status, while the latter does not.
Eurozone loans to Spain through the ESM would enjoy greater protection in case Madrid defaulted, leaving private creditors shortchanged. "Ministers will look into this again," EFSF manager Klaus Regling said.
Lagarde also recommended softening deficit targets for countries in recession, and longer term risk-sharing measures such as a banking union and the "gradual, but limited sharing" of sovereign debt, matched by "stronger governance" and "democratic controls."
The advice went against most of Germany's preferred policy prescriptions.
Throughout the crisis, Berlin has been wary of using common resources to make life easier for struggling eurozone members, fearing that outside help would lead them to relax necessary but painful budget cuts and economic reforms.
Earlier, German Finance Minister Wolfgang Schaeuble rejected "speculation" that conditions allowing eurozone rescue funds' interventions in the bond markets may be eased in response to Italy and Spain's plight.
IMF-eurozone positions appeared closer on Greece, as both sides downplayed suggestions that they were ready to relax the terms of the country's bailout in order to provide breathing space to the new government in Athens.
Juncker said "prior actions" need to be spelled in an "updated memorandum of understanding" before more bailout payments can be unblocked. But Rehn said the country would not be starved of cash: "there should be no problem in this regard in the short term."
An EU-ECB-IMF troika would be in Athens on Monday to ascertain how far Greece has fallen behind in reform efforts, Lagarde said. In the meantime, a pending 1-billion-euro bailout payment will be unfrozen by the end of June, helping Athens pay its share into the ESM.
Because of its exposure to Greece, Cyprus was expected to follow in Spain's footsteps in asking for loans to fix its financial sector. However, it was unclear whether it would turn to eurozone partners or Russia, which has provided help in the past.
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