By Oliver Hotham
The British government is offering the International Monetary Fund (IMF) £10 billion in loans to help shore up struggling economies.
The chancellor of the exchequer offered the sum as part of a G20 finance ministers meeting in Washington.
Managing director of the IMF Christine Lagarde is aiming to boost the organisation's lending capacity by $400bn and has already received donations to the tune of $320 billion.
The money is intended to fund loans to help the global economic recovery.
George Osborne said the contribution was possible because of his government's "tough action" to help the British economy which means the UK "can be one of the countries that can support the IMF".
"It is a loan with interest, not a gift. Let me reiterate, it does not add to our deficit or national debt," he continued.
"It is not money that could otherwise be spent on public services, and no country has ever lost any money lending to the IMF."
The eurozone crisis remains the biggest threat to world economic stability, however. It is possible Ms Lagarde will use IMF funds to bail out Spain in coming months.
This would contradict Mr Osborne's claimthat that the UK would not contribute directly to another eurozone bailout.
The objective of the IMF is not always to lend money, but to act as a guarantor that countries will not go bankrupt, improving the confidence of private investors and ensuring problems will not get worse.
The United States and Canada have not taken part. Brazil wants to have more say in running the IMF in return for a commitment guaranteeing it receives extra money.
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By Oliver Hotham
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