Germany is in effect the bank to Europe because it is largest economy by GDP and has the fewest debt problems. Many Germany citizens and politicians have been against Germany’s aid to Greece and to a bailout fund meant to help in other national bailouts in the regions. So, there is pressure on Angela Merkel to end further funding for these initiatives, despite pressure from the IMF. And, that pressure has recently grown as the G20 nations have impressed their wishes for a larger pool of capital on Germany. As a matter of fact, many G 20 nations say they will not put money into the IMF for aid, if the European governments will not increase the size of their own fund
Wolfgang Schäuble, the German finance minister, publicly reiterated his government’s insistence that an increase was unnecessary, saying it would create “disincentives” for countries like Italy and Spain to continue reforms.
That means that Germany believe in the familiar contagion argument–if one nation gets a bailout, others will follow as a way to solve their own sovereign debt problems.
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