European banking crisis can choke trade, finance: India

BANGALORE: India today said a crisis in the European banking system can choke trade and finance and in the process global economic growth, and called for substantially expanding the resource base of multilateral development banks.

"The sovereign debt crisis and the banking crisis, now on the horizon, has grave implications not only for the European economy, but also global economy," External Affairs Minister S M Krishna said here.

He was addressing a joint press conference with German Foreign Minister Guido Westerwelle.

"A crisis in European banking system can choke trade, finance and economic growth not just in the Euro Zone but in the world at large," Krishna said.

Europe is of particular concern as it accounts for a significant share of the global economy and is also India's major trade and investment partner, he said.

Krishna said there is a need to substantially expand the resource base of multilateral development banks so that they have the fire-power to help developing countries pursue their developmental goals.