He added that the current situation was more precarious than when Lehman Brothers collapsed and sent the global economy into a tailspin in late 2008, as there was no longer the belief in markets that key countries would not default on their debts.
"Risks to the stability of the EU financial system have increased considerably," he said in a speech to the Bretton Woods committee in Washington, on the sidelines of the annual IMF meeting.
"Over the past few months, sovereign stress had moved from smaller economies to some of the larger EU countries.
"Signs of stress are evident in many European government bond markets, while the high volatility in equity market indicates that tensions have spread across capital markets around the world," he added.
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