IMF suggests ‘rainy-day fund’ to deal with crises

There is no guaranteed safe way out of the euro crisis, the IMF has cautioned but urges a ‘rainy-day fund’, common unemployment insurance and a fully-fledged euro area budget for the future.

The Washington-based body recommends a system similar to that of federal Germany and the US to avoid the kind of debacle the eurozone is trying to cope with.

But none of this will deal with the debt overhang, which it describes as a delicate issue that will require a balance of tradeoffs.