The International Monetary Fund has said that urgent action will be needed to prevent a meltdown in the eurozone, as the debt crisis in Greece, Ireland and Portugal threatens to spread to other countries.
"It would be very costly not just for the eurozone but for the global economy to delay tackling the sovereign crisis," said IMF official Luc Everaert in a report.
The lender said that European leaders would have to act quickly to avoid the crisis spreading beyond Europe. It said that Europe had to commit to greater integration.
Without giving any specific advice for what Europe should do to avoid the crisis, the report suggested that leaders might expand the scope of the European Financial Stability Facility.
Ahead of a crucial summit on Thursday, in which eurozone leaders will meet to discuss the crisis, German Chancellor Angela Merkel has played down the chance that Greek debt will be restructured after one meeting.
"Thursday will help in this, but further steps will be needed," she said, adding that no "spectacular" steps would be taken.
Merkel will meet the French president, Nicolas Sarkozy, in Berlin today to prepare for the meeting.
The Guardian reported that Jonathan Loynes, chief European economist at Capital Economics, said that the meeting on Thursday was the "last chance for eurozone policymakers to get a grip on the region's debt crisis".
"Anything other than a very decisive response, which could be applied not just to Greece but also to Spain and Italy, could see the situation become irretrievable," said Loynes.