Global financial stability report warns of large-scale capital flight with the potential to trigger a credit crunch and an ensuing recession; IMF predicts further bank asset shrinkage of between $2.8 trillion to $4.5 trillion by end-2013; José Viñals says it is of utmost necessity that the eurozone achieves banking and fiscal union; it says the function of a banking union must be to break the pernicious link between banks and their sovereign; says a banking union requires a fiscal union to be credible in the form of a resolution fund and deposit insurance; Peter Orszag warns Europeans not to underestimate the hysteresis effect that results from the austerity policies;  Luis de Guindoes said the IMF forecasts for Spain are too pessimistic; Vittorio Grilli presents the 2013 budget law, which includes further savings to achieve the budgetary target; there will be new cuts to the health budgets, and a non-renewal of temporary contracts of public workers; Angela Merkel's visit to Athen was no PR disaster after all; the Wall Street Journal says the purpose of her visit is to stabilise the Samaras government and to defend herself against attacks from Peter Steinbruck; says no one in Merkel's surrounding is under any illusion about her perception by ordinary Greeks; Kathimerini reports that Merkel assured Samaras that he will get the next round of money as long as he keeps on going with the reforms; the Greek finance ministers says that talks about an extension of the Greek programme are finally on the table; the French parliament passes the fiscal pact with a wide margin - Hollande managed to secure a small majority of leftist MPs, not having to rely on opposition vote; Portugal replaces tax measures with spending cuts in 2013 budget; a former German government advisor says Germany is using bailouts to rescue its own banks; Ecofin reaches agreement on financial transaction tax on the basis of  enhanced coordination; Finland has yet to decide whether it wants to take part in this programme; Suddeutsche Zeitung wonders how this tax could conceivably stop the next financial crisis; Silvio Berlusconi, meanwhile, reiterates his support for Mario Monti, but nobody believes him.