One of the issues that has never been too far in the background during the current concerns over Greece’s ability to bring down its budget deficit and finance its sovereign debt is a potential role for the International Monetary Fund. The IMF’s specialty, after all, is to make loans to governments who are fiscally overextended in return for a commitment to engage in tough reform and austerity measures. Since the onset of the financial crisis, the IMF has had in its quiver not only more cash but also broader and more flexible ways to lend – including to countries whose economies are essentially sound like Poland and Mexico who have recently taken advantage of “preventive” loans. Agreeing to an IMF program no longer has the stigma of bad behavior attached to it that some have seen in the past.

Still, it is understandable that the European Central Bank, the European Commission, and several euro-zone member states may prefer to handle the Greek challenge among themselves, although without offering a full-fledged bailout. Despite the challenges to the euro’s cohesion since the financial crisis, many in Europe would see an IMF intervention as proof of failure – of the fact that Europe’s claim to be an economic and financial superpower (if not a military one) was nothing more than an idle boast. Indeed, there are many in the EU who view the Greek situation as a sign that Europe needs more integration - much tighter coordination of taxation, investment, and spending among the member states to match the financial integration represented by the euro. One proposal that is floating around European capitals is the creation of a European Monetary Fund (EMF) that would perform on a regional basis what the IMF does globally.

But whether it is the IMF or the mooted EMF that is at issue, it may be necessary in the future that such organizations have the power to monitor the behavior not only of deficit countries like Greece but also of surplus countries. If Greece does get its domestic house in order and once again becomes competitive, it will need export markets for its goods to secure a durable recovery. Unless current global imbalances are to continue (an unsettling prospect) they will have to go to countries that are now in surplus. In Europe that means Germany; in Asia that means China.

It is understandable that Germany no longer wishes to be Europe’s sole paymaster, particularly if writing a check to Greece means an increased likelihood that other EU countries will think they can get away with fiscal imprudence in the future. But it is more difficult to grasp Germany’s reluctance, so far, to open up its economy to imports from its euro-zone partners through liberalization of its product, services, and labor markets – a move that would be in the best interest of all concerned.