Greece's finance minister has pledged to do whatever it takes to haul the nation out of crisis, but European policymakers wary of a devastating default are pushing to deepen the region's bailout fund.
Rumours that plans are being made for an inevitable Greek debt default caused further volatility on stocks and currency markets in Asia on Monday, after a torrid week that saw sharp markdowns on global bourses.
Tokyo shares led broad losses in Asian trade, falling 1.65 percent while the euro slipped against the dollar as risk-averse investors shunned the European single unit.
Greek Finance Minister Evangelos Venizelos said in Washington on Sunday that Athens will introduce new measures to fight the debt crisis, which threatens to infect the eurozone and hobble the global economy.
"We are ready to take the necessary initiatives at any political cost," Venizelos said in an address to the Institute of International Finance, an association of 450 banks from around the world."I don't think that you can find many examples at the international level of such rapid fiscal adjustment efforts," he said, adding that protest-hit Greece had paid a heavy political and social price for its action.
But as he made his pledge, a pessimistic eurozone was making plans to expand a stabilisation war chest -- the European Financial Stability Facility (EFSF) -- that would throw up financial firewalls in the event of a crisis.
"We are thinking about the possibility of giving the EFSF greater leverage, to give it greater strength," EU finance commissioner Olli Rehn said in comments to be published in newspaper Die Welt Monday.
Analysts complained that the mixed messages, and a lack of clarity after last week's meeting of finance chiefs from the Group of 20 leading economies, fuelled concerns that another global financial crisis is looming.
The G20 members issued an emergency statement saying they were "committed to a strong and coordinated international response to address the renewed challenges facing the global economy."They promised to take "strong actions to maintain financial stability, restore confidence and support growth".
"But they came short of mapping out any measures with immediate effect so have failed to stop the market's selling of risky assets," said Teppei Ino, an analyst at the Bank of Tokyo-Mitsubishi UFJ.
Britain's former finance minister Alistair Darling said Sunday that European governments had "only this weekend... realised it is only a matter of time before Greece defaults."
Darling, who held the key post during Britain's 2008 banking bailout, accused European leaders of having allowed the Greek crisis to "run on and on and on" and urged them to take immediate action.
The eurozone agreed in July to increase the EFSF's lending capacity to 440 billion euros ($591 billion). Rehn did give any figures on an enlarged fund but reports said it could be boosted to more than 2.0 trillion euros.
"The current crisis is a serious combination of a crisis in public debt and weaknesses in the financial sector," Rehn said, referring to concerns over the strength of eurozone banks.
"We cannot solve one without the other," he added. "We need to shore up repair work in the financial sector with a recapitalisation of the banks."
Greece and the euro are facing a tough week ahead as European and IMF experts resume a fiscal audit that will decide if debt-hit Athens can escape default despite a massive EU-IMF bailout.
There is mounting speculation that the EU rescue of Athens crafted in July -- which still awaits ratification by the 17 eurozone member nations -- will need to be revised again.
Ireland and Portugal have also been forced to seek EU-IMF bailouts, and there are now question marks over the financial health of the large economies of Spain and Italy.
Greek Prime Minister George Papandreou visits Berlin this week, ahead of a German parliamentary vote on whether to approve the plan to expand and deepen the EFSF.
German Chancellor Angela Merkel said Sunday she was confident she would not have to rely on the opposition to pass Thursday's crucial vote.
"I would like to get my own majority and I am confident I will get this. I am going to campaign for that this week," she said in a television interview.
While Greece continues its dance with bankruptcy, only a year after a massive EU-IMF bailout loan of 110 billion euros ($149-billion), some European leaders still insist the country should not be allowed to go broke.
"Greece will avoid bankruptcy, because its in the interest of the Greek state, the Greek people and it is in all our interests," France's European Affairs Minister Jean Leonetti told TV5-monde television channel Sunday."If Greece goes bankrupt tomorrow it will cost us more than if they don't go bankrupt," Leonetti said.
European leaders are still struggling to find a persuasive response to the eurozone's sovereign debt crisis that has rocked the single currency area and raised criticism from the United States and the International Monetary Fund.
The IMF's policy board said over the weekend it had agreed to act decisively and collectively "to restore confidence and financial stability, and rekindle global growth".