What can European policymakers do to resolve the debt crisis?

EUROPE is working to ramp up the fire-power of its bailout fund amid growing alarm over its slow handling of a debt crisis that threatens to derail a global economic recovery, but European policymakers disagree over the best course of action.

Many of the options to bolster the €440 billion European Financial Stability Facility (EFSF) have catches, including opposition from countries like Germany, which fears a replay of its disastrous economic policies of the 1920s.

Meanwhile, eurozone officials played down reports yesterday of emerging plans to halve Greece’s debts and recapitalise European banks to cope with the fallout, stressing that no such scheme is on the table yet.