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Greece must surrender control of its budget policy to outside institutions if it cannot implement reforms attached to euro zone rescue measures, the German economy minister was quoted as saying on Sunday.

Greece and its private creditors said on Saturday they were piecing together the final elements of a debt swap and expected to have a deal ready next week, essential for sealing a new bailout and avoiding an uncontrolled default.

Greek officials reject German proposals for a eurozone budget commissioner to oversee spending, as agreement nears on a second bailout for Greece.

The World Bank is moving to prop up the European banking system in response to the crisis in the region, echoing the steps it took during the 2008 world crisis and reflecting heightening fear that the euro’s problems are starting to crimp the global economy.

Greece and its bondholders have made little progress since resuming stalled talks on a debt swap, three sources close to the talks told Reuters on Thursday, with time to strike a deal and avoid a messy default running out rapidly.

The world economy will lose momentum in 2012 but it will keep moving in the right direction, according to Reuters polls of around 600 economists who said crisis-hit Europe would drag on global growth.

The International Monetary Fund said it aims to raise up to $500 billion for new loans, and said its staff estimates that countries will need about $1 trillion in loans over the coming years.

Financial markets are unlikely to be derailed by mass euro zone downgrades but with Greek debt talks at an impasse, pressure has been loaded on the bloc to shore up its defenses and glimmers of optimism from last week have been firmly doused.

Standard & Poor's ratings agency has downgraded France's credit rating, French television channels reported on Friday, citing a government source.

Greece could reach a bond swap deal with private creditors to reduce its debt load by the end of next week, with a formal offer possible by early February, a finance ministry source said on Thursday.