Europe bolstered its anti-crisis arsenal, channeling 150 billioneuros ($195 billion) to the International Monetary Fund as theEuropean Central Bank widened its support for sagging bondmarkets.

Four countries not using the single currency also pledged to addto the IMF war chest while Britain refused to commit, preventingofficials from reaching the 200 billion-euro target to ease theeuro area's home-grown debt burdens. The U.K. will “define itscontribution” in early 2012, euro finance ministers said in astatement after a conference call yesterday.

The IMF track is “obviously a small-scale solution,” former UBSAG Chairman Peter Kurer told Maryam Nemazee on BloombergTelevision's “The Pulse” program. “What really would be needed inthe ideal world would be euro bonds or a substitute which can bringlarge-scale liquidity and confidence into the markets.”

Germany continued to oppose an early decision to raise the limitof 500 billion euros on overall emergency aid. European leadersplan to tackle that question by March. Still, the IMF infusion andjump in ECB bond purchases indicated that Europe is wielding moremoney instead of relying on budget cuts alone to persuade investorsto return to markets scarred by two years of burgeoning debt andthreatened defaults.

The ECB said it settled 3.36 billion euros of bond purchases inthe week ending Dec. 16, up from 635 million euros the week before.The Frankfurt-based ECB's next crisis-fighting act comes today,when it floods the banking system with three-year loans.

“I cannot put a figure to it, but I would think that it would besignificant,” ECB Vice President Vitor Constancio told BloombergTelevision in Frankfurt yesterday. “It's an important instrumentfor banks.”

Bonds of Italy and Spain have rallied on expectations that theunprecedented long-term loans will lead banks to buy moregovernment debt. Two-year yields have fallen to 5.2 percent inItaly from 6.2 percent when the plan was announced Dec. 8. InSpain, they dropped below 3.4 percent from 4.9 percent.

At the same time, ECB President Mario Draghi said the bond-buying operations won't go on forever, indicating that countriessuch as his native Italy can't count on massive interventions toreduce their borrowing costs.

The ECB will start in January to act as a market agent for theEuropean Financial Stability Facility, the 440 billion-eurogovernment-backed rescue fund set up in May 2010 and due to bereplaced by a permanent fund next year.

Bundesbank's Demand

Contributions to the Washington-based IMF were controversialinside and outside the 17-nation euro region. The most potentcentral bank among the euro users, Germany's Bundesbank, coupledits 41.5 billion-euro input to a promise that the aid not beearmarked for Europe.

Such recycling would violate euro rules, inspired by theBundesbank, that bar central banks from financing governmentdeficits. As a result, the euro area will lend to the IMF's generalresources, not to a special euro crisis fund.

France, the second-largest European Union state using the euro,will supply 31.4 billion euros, the statement said. Italy willdeliver 23.5 billion euros and Spain 14.9 billion euros.

The three countries drawing on emergency loans to escape default— Greece, Ireland and Portugal — weren't asked to contribute, theGreek Finance Ministry said. Amounts pledged by four EU countriesoutside the euro — the Czech Republic, Denmark, Poland and Sweden —weren't immediately disclosed.

Ten days after U.K. Prime Minister David Cameron battled euroleaders over crisis management at a Brussels summit, Britain'swariness of the IMF program sabotaged the euro region's goal ofdrumming up 50 billion euros from the rest of the EU.

“The U.K. has always been willing to consider further resourcesfor the IMF, but for its global role and as part of a globalagreement,” the Treasury said in an e-mailed statement.

The euro added 0.1 percent to $1.3010 at 9:05 a.m. in Brusselstoday, down from about $1.33 at the Dec. 8-9 summit.

The success of the IMF strategy hinges on how other major powersreact. While talks are under way with China, there is “no chance”that U.S. lawmakers will approve more funds, German FinanceMinister Wolfgang Schaeuble said on Deutschlandradio.

G-20 Bid

“The EU would welcome G-20 members and other financially strongIMF members to support the efforts to safeguard global financialstability by contributing to the increase in IMF resources so as tofill global financing gaps,” Luxembourg Prime Minister Jean-ClaudeJuncker, who chaired the conference call, said in thestatement.

Europe is piecing together a strategy for containing the crisis,which started with the Greek government uncovering an unexpectedbudget hole in October 2009 and led to 256 billion euros inbailouts for Greece, Ireland and Portugal.

After “comprehensive” fixes hammered out in July and Octoberquickly fizzled, European leaders were careful not to oversell thelatest strategy, unveiled at sunrise Dec. 9 after an all-nightwrangle.

The key, demanded by German Chancellor Angela Merkel, is a newtreaty cementing balanced-budget rules and making it harder forviolators to wriggle free from penalties. Negotiations begin todayon the text, with the goal of signing the treaty in March.

While no government has been punished for a deficit above thelimit of 3 percent of gross domestic product in the euro's 13-yearhistory, the renewed vow of fiscal probity was designed toencourage action by the independent central bank.

The pledge marked a “breakthrough,” Draghi told a EuropeanParliament committee in Brussels yesterday. “The new fiscal compactis an essential signal, showing a clear trajectory for the futureevolution of the euro area.”

Bloomberg News

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