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By Rowena Mason, in Davos

Speaking at the World Economic Forum in Davos, the Chancellor said the UK was willing to contribute more for a global bail-out pot through the International Monetary Fund (IMF).

 

However, he would not commit billions of pounds of British taxpayer money until Europe had done more to help itself.

 

In a challenge to European leaders, he said: "The world needs to see the colour of their money before it contributes any more."

 

Echoing comments made earlier this week by Christine Lagarde, head of the IMF, Mr Osborne said the "eurozone 'needs some form of fiscal risk-sharing' to complement the fiscal compact and provide more support for countries making painful adjustments".

 

The Chancellor piled pressure on Germany by saying Europe's central bank needs to issue bonds to finance national governments and help prop up the single currency. Germany has so far been strongly opposed to this idea.

 

 

"Political agreement to the principle of Eurobonds would go a long way to convince financial markets of the euro's long-term future," the Chancellor said.

 

Mr Osborne's remarks follow Prime Minister David Cameron's sharp rebuke to European countries on Thursday for failing to take the "bold action" needed to get their economies out of a "perilous" state.

 

On Friday, it was clear that some in Europe have not forgiven Britain for opting out of a treaty aimed at resolving Europe's financial problems.

 

Asked what had happened, Wolfgang Schaeuble, the German finance minister, said: "I would like to give you the mobile number of David Cameron."

 

Mr Osborne said Britain was not "anxious" about being left out while the 27 other European Union countries were tying their finances closer together.

 

He said more co-operation between European countries with the single currency was "welcome" because it was the best way of finding a solution to the crisis, which would in turn boost the UK.

 

Chiming with comments from Tim Geithner, the US Treasury Secretary, Mr Osborne said Europe needed to build a bigger weapon to combat the crisis.

 

"If fiscal risk sharing is the way to make the euro work in the future, the most urgent requirement to address the current crisis is an increase in the resources of the eurozone's financial firewall," he said.

 

"Eurozone countries need to convince financial markets that they can respond to any eventuality. All that is required is the political agreement."

 

In spite of Britain's troubled economy, Mr Osborne made an effort to woo his audience of company leaders by claiming Britain was even more business-friendly than the US.

 

"We are a liberal Anglo-Saxon economy and even more open to trade and investment than the US," he said.

 

In a fillip for the Coalition, Ms Lagarde said the IMF remained supportive of UK austerity measures, calling them "the right thing to do".

 

The Chancellor spoke in Davos as he announced new reforms of the banks designed to make sure Britain should "never again see the paralysis and confusion" caused by the debt crisis. Under the laws, the Chancellor will be able to seize personal control if it starts to look like taxpayer money could be at stake.

 

"There will be no ambiguity about who is in charge," he said. "In a crisis… both the responsibility and crucially, the power to act, will rest with the Chancellor." Telegraph