International Monetary Fund head Christine Lagarde spoke with Jean-Claude Juncker, right, president of the euro group, and Luxembourg’s economy minister, Luc Freiden, on Thursday.
Virginia Mayo, Associated Press
European leaders are vowing to defend euro
- Article by: ELISABETTA POVOLEDO and STEVEN ERLANGER
- New York Times
- June 22, 2012 - 9:29 PM
ROME -- The leaders of the eurozone's four largest economies vowed on Friday to defend the common currency with all means necessary, trying to reassure markets before yet another key summit meeting of the European Union next week in Brussels.
But there is clear disagreement about what those mechanisms ought to be, with German Chancellor Angela Merkel coming under increasing pressure from the other three leaders -- and from the International Monetary Fund -- to do more to support the eurozone and its banks. On Friday, however, Merkel gave little indication that she was warming up to calls for collectivized debt or for the use of European bailout funds to buy sovereign bonds of Spain or Italy.
"There was an agreement among all of us to use any necessary mechanism to obtain financial stability in the eurozone," Spain's new prime minister, Mariano Rajoy, told a joint news conference with Merkel, President Francois Hollande of France and Italian Prime Minister Mario Monti.
"The euro is here to stay, and we all mean it," Monti broke into English to say. But he added that while much had been done to stem the euro crisis, it was still insufficient. The markets are sure to agree.
Hollande had presented a growth pact of about 1 percent of European gross domestic product, which is between 120 billion euros and 130 billion euros, he said. He had vowed during his campaign to alter a fiscal treaty to include growth measures, but this package seemed to suffice.
Merkel said Friday that the four had agreed on such a growth pact. But there is little new money in the pact, which mostly redirects existing funds, though it also creates so-called "project bonds," whereby the eurozone will provide credit to the private sector for infrastructure projects and job-creation.
Merkel also said that the four agreed on a financial transaction tax, which Britain opposes. But it is likely that the eurozone will go ahead with such a tax without Britain, though that is likely to give London's large financial sector an even greater competitive advantage than it has now. The tax could be used to fund future bank rescues, avoiding more sovereign debt.
London alone cannot block such a tax.
© 2013 Star Tribune