Eurozone gets bold proposal
Source: Agencies |
August 18, 2011, Thursday
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The leaders of France and Germany yesterday said they want the heads of the eurozone countries to elect the president of a new "economic government" who would direct regular summits to respond to the continent's financial crisis.
For many in the markets, the proposal fell short of hopes: a grand plan to save the euro and, in particular, a sign the eurozone was moving toward a single bond issued by the 17 countries.
French President Nicolas Sarkozy and German Chancellor Angela Merkel outlined their proposals in a letter to Herman Van Rompuy, president of the European Council. They said that they hoped Van Rompuy would get the job.
The two leaders, who met in Paris on Tuesday, called the twice-yearly summits "the cornerstone of the new economic government of the eurozone."
However, heads of the eurozone governments already hold summits, though not regularly scheduled ones, under the chairmanship of Van Rompuy. The first was in 2008.
Sarkozy and Merkel also raised the politically sensitive issue of pensions, saying eurozone states should rapidly implement structural reforms, including changes in "retirement policy." They did not elaborate.
As global stocks fell, shares in stock exchange operators were hit particularly hard on news the two leaders want to introduce a tax on financial transactions. Deutsche Boerse slid 3.7 percent and the London Stock Exchange Group PLC fell 4.7 percent. Merkel and Sarkozy said the two countries' finance ministers would come up with a proposal by September that would be forwarded to the European Commission.
A transaction tax - a small percentage taken from foreign exchange and share transactions, for instance - has been proposed as a source of money to pay for bank bailouts. But European Central Bank head Jean-Claude Trichet says it would only work if introduced globally. The United States is also against the idea.
Yusuf Heusen, senior sales trader at IG Index, said the news was hurting the shares. "It's worth bearing in mind, however, that this is simply a proposal and there are many hurdles to overcome, but without doubt it's going to be squarely in focus in the weeks and months ahead."
Merkel's spokesman, Steffen Seibert, said the proposals would bring a "higher level of commitment" to efforts to stabilize budgets and fight debt. Yet yesterday's letter seemed to back away from the boldest proposal Sarkozy had put forward a day earlier - the creation of a eurozone economic government. The letter gave few details and described it as a reinforcement of current policies.
For many in the markets, the proposal fell short of hopes: a grand plan to save the euro and, in particular, a sign the eurozone was moving toward a single bond issued by the 17 countries.
French President Nicolas Sarkozy and German Chancellor Angela Merkel outlined their proposals in a letter to Herman Van Rompuy, president of the European Council. They said that they hoped Van Rompuy would get the job.
The two leaders, who met in Paris on Tuesday, called the twice-yearly summits "the cornerstone of the new economic government of the eurozone."
However, heads of the eurozone governments already hold summits, though not regularly scheduled ones, under the chairmanship of Van Rompuy. The first was in 2008.
Sarkozy and Merkel also raised the politically sensitive issue of pensions, saying eurozone states should rapidly implement structural reforms, including changes in "retirement policy." They did not elaborate.
As global stocks fell, shares in stock exchange operators were hit particularly hard on news the two leaders want to introduce a tax on financial transactions. Deutsche Boerse slid 3.7 percent and the London Stock Exchange Group PLC fell 4.7 percent. Merkel and Sarkozy said the two countries' finance ministers would come up with a proposal by September that would be forwarded to the European Commission.
A transaction tax - a small percentage taken from foreign exchange and share transactions, for instance - has been proposed as a source of money to pay for bank bailouts. But European Central Bank head Jean-Claude Trichet says it would only work if introduced globally. The United States is also against the idea.
Yusuf Heusen, senior sales trader at IG Index, said the news was hurting the shares. "It's worth bearing in mind, however, that this is simply a proposal and there are many hurdles to overcome, but without doubt it's going to be squarely in focus in the weeks and months ahead."
Merkel's spokesman, Steffen Seibert, said the proposals would bring a "higher level of commitment" to efforts to stabilize budgets and fight debt. Yet yesterday's letter seemed to back away from the boldest proposal Sarkozy had put forward a day earlier - the creation of a eurozone economic government. The letter gave few details and described it as a reinforcement of current policies.
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