Monday, November 28, 2011

Euro Zone Leaders Weigh New Budget Rules

New York Times
November 27, 2011

Euro zone leaders are discussing a deal among themselves to institute strict new budget rules for their countries, rather than go through the long, complicated process of amending European Union treaties. By acting more quickly, they hope to reassure skeptical financial markets and encourage the European Central Bank to do more to fight the deepening sovereign debt crisis on the Continent.

Investors clearly are not persuaded by the intermittent efforts that Europe has made to protect major countries like Italy and Spain from the crisis, which started in smaller, more fragile economies like those of Greece and Ireland. The leaders of Germany, the mainstay of the euro zone, want a new treaty that would stop euro nations from posing a threat by running large deficits or amassing crushing debts, but France, the zone’s second-largest economy, believes that amending treaties would take too long to help now.

France, Germany and Italy are ready to agree on new rules and encourage more coordination of economic and fiscal policy, the French budget minister and government spokesman, Valérie Pécresse, said Sunday.

The idea would be “a governance with real regulators and real sanctions, that would give real confidence,” she told the television channel Canal Plus. “Germany, France and Italy want to be the motor of a Europe that is much more integrated, much more solid and with regulatory mechanisms that are virtuous, that don’t allow a cheater, so that there is no one who can exempt themselves from the rules that are set.”

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