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Merkel and Sarkozy: Hands off Central Bank

The Local · 24 Nov 2011, 18:04

Published: 24 Nov 2011 18:04 GMT+01:00

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"The French president has just underlined the European Central Bank is

independent," Merkel told reporters at a joint news conference with President Nicolas Sarkozy of France and Prime Minister Mario Monti of Italy in the French city of Strasbourg. "So the eventual modifications to the treaties will not concern the duties of the ECB, which concern monetary policy and monetary stability.”

Merkel and Sarkozy have said they want to modify European treaties to achieve a closer, more easily controlled fiscal union.

But many investors were hoping European governments would take a more direct role in the central bank to try to manage the continent’s long-running debt crisis. Markets tanked on news of the hands-off approach from the leaders.

Some elements in the French government have been calling for more control over the central bank, while the Germans have resisted the idea.

French ministers – and many other eurozone members – have said that, if the ECB were allowed to monetize sovereign debt, its almost unlimited resources would finally end market speculation about potential defaults.

The leaders promised to work to stabilize the euro before their next summit on December 9 to revise EU treaties.

France, Germany and Italy are determined to do everything possible to ensure the survival of the euro, French President Nicolas Sarkozy said, saying the leaders would "do everything to support and guarantee the euro's durability."

Story continues below…

The goal of the Thursday meeting was to begin to "accelerate" the 17-nation bloc's bid to calm bond markets by undertaking reforms of its financial governance, as the crisis threatens to spread to Spain and the eurozone core.

Germany, still seen as the strongest eurozone economy, has so far escaped the fury of the markets but its long term economic health depends on its EU trading partners reducing their deficits and stabilizing the economy.


The Local (news@thelocal.de)

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Your comments about this article

04:53 November 25, 2011 by Nemo2010
Sarkozy is a buffoon. He's grasping at straws, completely frightened that France has taken a back seat to Germany in the Euro Zone. Should he be frightened? Time will yet tell.
14:54 November 25, 2011 by christopheuk25
Malignant dwarf is so out of his league it's embarrassing,Frau schnitzel is not much better forcing her people into penury.
16:28 November 25, 2011 by mugen
it's not Merkel who is forcing people into penury, i think germany is right not to take on the debts of all the zone.

However i do appreciate that Germany has benefited from an artificially low exchange rate.

what needs to be done is save the people and let the banks go, rather than the other way round. see steve Keen for more detail
19:24 November 25, 2011 by raandy
Sarkosy's smile is sooo phony .
23:52 November 25, 2011 by PierceArrow
Germans (including the non-Muslim guest workers) work hard and save money. Greeks loaf and spend money. The result is obvious.

BTW, Sarkozy has his flaws, but he is the best leader that France has had in a long time. If the French vote out Sarkozy's party and replace them with more left-wing politicians, that would be as stupid as Russia replacing Kerensky with Lenin in 1917.
02:27 November 26, 2011 by lenny van
Why should Germany use its' wealth to help reduce the interest payments on the European countries, who cannot bear the austerity measures that are necessary to protect Germany's currency advantage?

I recently read that the WW II damages that the Germans owed the European Allied countries (excluding Russia) were estimated to be about 2 trillion dollars in today's dollars. The value of the reparations that it paid (mostly in industrial plant and equiptment) was estimated at 3 billion dollars in today's dollars.

The money that it received from the United States through the Marshall plan to stimulate the economic miracle is not factored in to these numbers. Not everyone agrees the price for peace.

The world power of the future is Eurasian alliance of Germany, Russia and China.
06:25 November 27, 2011 by nemo999
The with several EU country bond yield curves inverted, and the rest including the German are in the process of inverting, the future does not look all that good for all of the members of the EU. Forget China, they have their own ditch to keep them busy. The world is entering a question of financial confidence, and the answer is look more and more like that no one has confidence. Even Germany is being questioned as to it's ability to roll it debt, as shown by the poor reception for the last round of Bund offering.
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