by Ming Jinwei BEIJING, May 10 (Xinhua) -- Central banks of Western countries have fought back to contain the Greek crisis by setting up a 750 -billion-euro (1-trillion- dollar) stabilizing fund and jointly injecting liquidity into financial markets. SETTING UP 'MONSTER' FUND Finance ministers of European Union (EU) nations announced earlier Monday they would set up a big stabilizing fund to stop the Greek debt crisis from spreading to other countries. The decision was taken after more than 10 hours of tough negotiations. Under the plan, the EU will provide 60 billion euros, while eurozone countries will try to secure another 440 billion euros through bilateral backing. The International Monetary Fund (IMF), which has been playing a more active role in tackling the Greek debt crisis, will provide 250 billion euros. Spanish Finance Minister Elena Salgado, whose country currently holds the rotating EU presidency, said after the meeting 'we are placing considerable sums in the interest of stability in Europe.' Meanwhile, Olli Rehn, EU's monetary affairs commissioner, said the decision to set up the stability fund proved the EU countries would do everything possible to defend their shared currency. EU finance ministers said in a joint statement released after the meeting that the stability fund would be in place to 'safeguard financial stability.' Late last year, the Greek government announced in a surprising move that its budgetary problems were much more serious than the previous government had acknowledged. Athens has been under severe fiscal pressure as government spending expanded to stimulate the economy and to meeting social security claims while tax revenues shrank during the sharp economic downturn. Greece inched closer to 'bankruptcy' after international rating agencies downgraded its sovereign debt ratings and bond market investors pushed up its borrowing costs to unsustainable high levels. The EU and the IMF announced a joint rescue plan of 110 billions euros on May 2 to help dampen fears about the Greek government defaulting on its debt, but the plan failed to assuage market fears and more and more believe the Greek debt crisis could well spread to other weaker eurozone economies like Portugal and Spain. Analysts believe the latest 'monster' fund was meant to prove to the market that the EU and the IMF were taking credible measures to contain the Greek debt crisis, and restore market confidence. CENTRAL BANKS' JOINT INTERVENTION Meanwhile, central banks of the euro zone, the United States, Canada, Britain, Switzerland and Japan are joining hands to inject fresh liquidity into the financial system. The European Central Bank (ECB) announced in a drastic move that it would start purchasing eurozone government bonds to support battered government debt markets. The ECB decision was seen by many as 'unusual.' The ECB is banned from directly buying government bonds so as not to subsidize those over-spending eurozone countries, but it can make asset purchases on the secondary market. Even though the ECB did not specify how much or what kind of government bonds it would buy, the decision itself was compared to a 'nuclear option' by some economists. With the ECB support, government bond prices would stop falling and give those beleaguered eurozone countries precious time to secure enough funds to meet their debt obligations. The ECB has resisted calls for a greater role in containing the Greek debt crisis in the past months, fearing its involvement would create so-called moral hazard and harm its primary efforts to maintain overall price stability. Other central banks announced they would inject dollar funds into the financial markets. Spooked investors have become more and more cautious about giving away their money and a liquidity squeeze witnessed during the financial crisis resurfaced, though to a much lesser extent. The Federal Reserve of the United States said its move was in response to the reemergence of 'strains' in financial markets in Europe. MIXED RESULTS The EU-IMF stability fund and the joint intervention of Western central banks are welcomed by many. The Group of 20 praised these measures. The news was also well received by the financial markets. Japanese stocks rebounded from heavy losses last week and the hard-hit euro bounced back a little to other major currencies. Usually, it will be a long process to restoring market confidence and the battle to contain the Greek debt crisis could stretch longer than many anticipated. The EU, the IMF and Western central banks have to take measures to prevent the Greek crisis from escalating into a full-blown pan-Europe sovereign debt mess, but the fundamental problem of the current crisis is about how eurozone countries could regain their economic competitiveness. Besides, it seemed that eurozone countries had to spend months narrowing their differences and making a collective decision. This shows that the euro zone, which came into being in 1999, has much to do to improve its internal consultations in times of crisis. 