The credit agency Standard & Poor's is now threatening to downgrade the top rating of the bailout fund for Europe's debt-ridden countries.
S&P issued the warning Tuesday, a day after it placed 15 of the 17 nations that use the euro, including economic powerhouses Germany and France, on a negative credit watch.
The credit agency said it would decide within 90 days whether to cut the AAA credit rating for the bailout agency by one or two notches after determining whether the credit standing of any of the individual countries should be trimmed.
A debt analyst for S&P, Moritz Kraemer, said at a Frankfurt news conference that it issued the warnings because European officials have made "a very slow and reluctant response" to the continent's debt crisis. He expressed skepticism that European leaders would act at a summit later this week to resolve the two-year debt contagion.
Kraemer said the effects of the debt crisis have spread through the continent and could worsen.
"Well, it's our opinion that the financial crisis that we are witnessing in the eurozone is no longer a crisis of individual countries on the periphery. We think it has taken a more systemic trajectory. It has been spreading into some core countries and also financial institutions in the core countries," Kraemer said. "It has deepened on the periphery. So we think that the current situation has the potential to destabilize further."
If the credit rating for the $591 billion bailout fund is cut, it would boost the borrowing costs to assist debt-ridden countries. Greece, Ireland and Portugal have already needed international assistance and analysts fear that Italy and Spain, with the continent's third and fourth largest economies, also might need help.
U.S.Treasury Secretary Timothy Geithner (L) leaves the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011
U.S. Treasury Secretary Timothy Geithner traveled to Europe Tuesday to prod the continent's leaders to take decisive action. He said the U.S. is encouraged that European leaders are taking steps to alleviate the crisis, while acknowledging that American policy makers face their own economic challenges.
Geithner is meeting with German Chancellor Angela Merkel and European Central Bank President Mario Draghi to warn that further delays could imperil the world economy, including the sluggish recovery in the American economy, the world's largest.
Ms. Merkel and French President Nicolas Sarkozy unveiled a plan Monday for tighter controls over the spending of individual governments. They called for changes to the treaty governing the 27-nation European Union, or at least covering budgets in the 17-nation eurozone.
European officials criticized the S&P threat of a downgrade, saying it ignored new efforts to resolve the crisis and the plans for unified action at the Brussels summit Thursday and Friday.
Ms. Merkel vowed that Europe would act and downplayed the significance of the possibility of an S&P ratings cut.
"What a rating agency does is the responsibility of the rating agency. On Thursday and Friday we will make the decisions which we think are important and indispensable for the eurozone and therefore contribute to the stabilization of the eurozone," Merkel said. "I also think we will regain confidence. I have always said this is a long process and it will continue for some time, but we charted the course yesterday with the French president and we will continue to stay the course."
All 27 EU nations would have to approve changes to the 1992 Maastricht Treaty that created the EU, but broad approval would not be necessary if spending controls apply only to the eurozone.
Some information for this report was provided by AP and AFP.