EU takes hard stance in bid to regain confidence
By Aoife White |
May 22, 2010, Saturday
|
Print Edition
Print Edition
EUROPEAN Union finance ministers yesterday started laying out new, tougher rules for their public finances in the hopes of winning back market confidence and preventing a repeat of the debt crisis that is threatening the euro.
Some nations are pushing for penalties and punishments -- from stripping countries of voting powers to ejecting them from the eurozone -- for repeated debt offenders. The aim is to avoid an EU bailout for another country, as happened with Greece, by tightening checks sooner.
Europe's stock markets, however, remained cautious. They continued to slide yesterday despite the approval by Germany's lower house of parliament for a 750 billion euro (US$937 billion) "shock and awe" package of cash and state guarantees to protect eurozone countries from bankruptcy.
Germany's 16 states also voted in favor of the package in the country's upper house and Germany's promise to contribute up to 147.6 billion euros in loan guarantees will be finalized after President Horst Koehler signs the bill -- expected to be a formality.
German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that the country had to make the rescue package a reality "because markets will only trust when it is actually in effect."
The approval failed to assure markets. The FTSE 100 index of leading British shares was down 2 percent while Germany's DAX tumbled 2.3 percent and the CAC-40 in France dropped 2.5 percent.
The euro was also trading close to a four-year low against the US dollar.
Some nations are pushing for penalties and punishments -- from stripping countries of voting powers to ejecting them from the eurozone -- for repeated debt offenders. The aim is to avoid an EU bailout for another country, as happened with Greece, by tightening checks sooner.
Europe's stock markets, however, remained cautious. They continued to slide yesterday despite the approval by Germany's lower house of parliament for a 750 billion euro (US$937 billion) "shock and awe" package of cash and state guarantees to protect eurozone countries from bankruptcy.
Germany's 16 states also voted in favor of the package in the country's upper house and Germany's promise to contribute up to 147.6 billion euros in loan guarantees will be finalized after President Horst Koehler signs the bill -- expected to be a formality.
German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that the country had to make the rescue package a reality "because markets will only trust when it is actually in effect."
The approval failed to assure markets. The FTSE 100 index of leading British shares was down 2 percent while Germany's DAX tumbled 2.3 percent and the CAC-40 in France dropped 2.5 percent.
The euro was also trading close to a four-year low against the US dollar.
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