THE IMF has called for the introduction of eurobonds and to use the eurozone's rescue fund to bailout banks directly.
The head of the IMF Christine Lagarde said these moves are necessary to prevent the debt crisis escalating.
But Lagarde said the IMF had found the situation in Europe to be dire.
"We are clearly seeing additional tension and acute stress applying to both banks and sovereigns in the euro area," she said.
The suggestions will annoy Angela Merkel who is firmly against drastic moves such as this.
When Ms Lagarde was asked what Germany would think of her suggestions, she smiled and said "We hope wisdom will prevail."