Treasurer Wayne Swan says it is "inconceivable" that European leaders could go to the G20 meeting next week without a solution to their economic crisis.
Europe's leaders are meeting to develop a plan to shield the euro after economic turmoil embroiling Greece, Ireland and Portugal.
Australia and other countries have been pressing the Europeans to come up with a solution before the G20 leaders' meeting in France on November 3 and 4.
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Mr Swan said the world faced a "scary situation" if the leaders could not agree.
"As this week has gone on I've got more and more concerned about the failure of the European leaders to agree to the plan," he told ABC radio on Thursday.
"The world economy has paid a very, very high price for the failure of the Europeans to act over the past 18 months.
"The global economy can't afford any more stumbles or any more missteps."
Prime Minister Julia Gillard will attend the G20 meeting.
