Germany, France eye stricter fiscal union
Baku, November 28 (AZERTAC). Germany and France stepped up a drive on Monday for coercive powers to reject national budgets in the eurozone that breach EU rules, as a market rout of European debt eased temporarily on hopes of outside help for Italy and Spain, according to Financial Post.
The OECD rich nations` economic think-tank said the European Central Bank should cut interest rates and step up purchases of government bonds to restore confidence in the euro area, which now posed the main risk to the world economy.
In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion in bond markets, and release a vital aid lifeline for Greece.
Berlin and Paris aim to outline proposals for a fiscal union before a European Union summit on Dec. 9 increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.
“We are working intensively for the creation of a Stability Union,” the German Finance Ministry said in a statement. “That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits.”
It dismissed a report by the newspaper Die Welt that Germany and the five other eurozone states with top-notch AAA credit ratings could issue joint bonds for themselves and partners.
Moody`s Investors Service warned that the rapid escalation of the euro zone sovereign debt and banking crisis threatened all European government bond ratings.
“While Moody`s central scenario remains that the euro area will be preserved without further widespread defaults, even this `positive` scenario carries very negative rating implications in the interim period,” the ratings agency said in a report.
Finance Minister Wolfgang Schaeuble acknowledged on Sunday that it may not be possible to get all 27 EU member states to back treaty amendments, saying agreement should be reached among the 17 euro zone members.
“That can be done very quickly,” he told ARD television, adding that it only required changing an additional protocol to the EU`s Lisbon Treaty.
Sources familiar with the Franco-German negotiations said they were also exploring a deal among a smaller number of countries outside the EU treaty if necessary.
The leaders of two smaller eurozone countries, Finland and Luxembourg, voiced unease about the Franco-German plans because they appeared to bypass the European Commission, which is seen as a guarantor of equal treatment for all member states.
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