Germany-France In Complete Accord On Debt Crisis Solution
German Chancellor Angela Merkel said that Germany and France are in complete accord on measures to save the euro that includes treaty modifications for the 17 Eurozone countries and automatic penalties for deficit limit and budget violators.
After a lunch meeting with Merkel, French leader Nikolas Sarkozy said that a European Monetary Fund is backed and that the eurozone sovereign debt crisis has to be stopped to preserve Europe.
Markets sent positive signals Monday in anticipation of talks between Eurozone leaders Angela Merkel and Nikolas Sarkozy to find a solution to the sovereign debt crisis. Italy also made a favourable impression after announcing 30 billion euros in austerity measures.
The talks aim at reaching a deal to save the euro which could see a closer fiscal union with more economic regulation along the lines of the US federal system. The need for tighter regulation of the EU's sovereign debt markets has become more urgent in recent years, after countries like Greece, Spain and Portugal ran into financial trouble because they could not repay their governments' borrowing costs.
This had a knock-on effect on market confidence as the euro weakened and banking stocks took a beating in the wake of write-downs of devalued government bonds, such as Greek bond holdings. Cyprus is dangerously close to a possible entry into the EU's financial support mechanism unless it can reverse a deficit estimated to be heading towards 6.7 percent for 2011.
This week is seen as 'make or break' for the euro, with hopes that Eurozone leaders will reach clarity on the best plan to restore market confidence.
The 17 EU members that make up the Eurozone are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain.
The EU members that are outside the Eurozone are: Bulgaria, Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, and the UK.
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