IMF warns on funding levels if crisis worsens

The International Monetary Fund (IMF) has warned it may not have enough money to bail out larger eurozone countries if the debt crisis were to spread.

IMF chief Christine Lagarde says the global lender can meet its current obligations but this could change if the crisis worsens.

Publicly, world leaders have said there is "no plan" for a Greek default.

But reports suggest leaders are working on a plan to allow Greece to default on its debts and remain in the euro.

It is believed that policymakers feel they need to concentrate on recapitalising banks and boosting the funds of the European Financial Stability Facility (EFSF).

BBC business reporter Joe Lynam says that the plan to increase the EFSF's financial firepower could see the money available to bail out EU banks and member states rise from 440bn euros ($596bn; £385bn) to about 2 trillion euros.

He added that the plan could also enable the European Central Bank to buy more Italian and Spanish bonds to prevent those two countries needing a full bailout.