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| Europe and the Single European Currency |
| (2011-12-06) |
| Last updated: 2011-12-07 13:41 EET |
Germany and France want to modify the EU Treaty, to include automatic sanctions for countries that fail to keep their budget under control. A new treaty is therefore needed to protect the Euro zone against economic crises in the future.
Europe has no choice but to apply harsher disciplinary economic and financial measures to member countries if it wants to avoid further turmoil of the type that is shaking the very foundation of the Euro zone. That is the conclusion reached at the summit of French president Nicolas Sarkozy and German Chancellor Angela Merkel held in Paris. The meeting was aimed at setting up a common approach ahead of the EU summit due at the end of this week in Brussels, and seen as decisive for the future of the single currency zone.
The two leaders have argued that, a possible solution to the ongoing crisis in the EU would be a new treaty, ideally signed by all 27 members, or at least by the 17 members of the Euro zone. The two EU officials have stressed the fact that the financial-economic stability of the EU cannot be strengthened at national level. However, each state has to make sure that their national budgets are balanced.
For this reason, the EU might introduce a “golden rule” in the budget-planning regulation for each state, allowing local Constitutional Courts to keep budget deficits at bay. French president Nicolas Sarkozy:
Nicolas Sarkozy: “We want automatic sanctions for countries that exceed a budget deficit threshold of 3%. What we want is a “golden rule” for balanced budgets in each of the 17 Eurozone member states, that should include a stipulation allowing national Constitutional Courts to ensure that local governments are keeping their budgets in check. We also want Euro zone heads of state and government to meet on a monthly basis, for as long as the crisis continues. Finally, with respect to the independence of the European Central Bank, we have decided not to make any comment, positive or negative, concerning its actions”.
The European Court of Justice will have to verify if the national Euro zone legislation provides for a limited loaning. Whereas modifying the EU treaty is a matter of urgency, the two officials have agreed that issuing the so-called eurobonds was not a solution to the ongoing crisis.
The daily paper The Financial Times writes that Germany has been particularly vocal in its opposition to eurobonds, in order to protect its lower borrowing costs. The topics approached by the two officials will be laid down in a joint letter to be submitted to European Council president Herman van Rompuy, ahead of the EU summit in Brussels.
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