German And French Leaders Proposed The Establishment Of "Euro Zone Economic Government"

According to Taiwan's China times, German Chancellor Merkel and France President Sarkozy held a summit in Paris on sixteen July to reveal three proposals, including the establishment of "euro zone economic government" and the seventeen member states of the euro zone, putting the budget deficit cap into the Constitution and introducing the European Union Financial transaction tax to strengthen the economic governance of the euro area. Germany and France also vowed to jointly defer the euro, and lay the foundation for further economic integration and fiscal union in Europe.

But the two euro zone leaders have stressed that it is not appropriate to expand the scale of the EU bail-out fund, and the joint issuance of Euro bonds is not feasible in the short term. The idea of euro bond was defeated, and the expectation of increasing the EU bailout fund was also lost. Germany and France's related announcement and initiative were even more urgent. The international financial market was worried about the aggravation of the European debt crisis. European and American stock markets fell on the sixteen day and the euro fell.

Merkel and Sarkozy proposed the establishment of a new euro zone management body, composed of heads of governments of the euro zone member states, as "genuine economic government". The current EU president Fan Rongpei temporarily led for two and a half years, and met at least two times a year to coordinate the financial policies of Member States. However, the authority of this institution is unknown.

The two also suggested that the euro zone countries should implement a balanced budget policy in mid 2012, and the member states should make amendments to the constitution to limit the deficit. It is generally expected that this move will be difficult. Some Member States will be entangled in debt and the amendment will lead to political turmoil. Britain media It challenged the German law to seize the power and prepare for the guidance of other countries' economic policies in the euro area.

Germany and France also advocated the Levy of financial transaction tax in the EU from September. It is estimated that the London Financial District will lose billions of dollars every year after its introduction. Other financial cities also suspect that this will only force European financial firms to leave.

Merkel and Sarkozy also said the EU's existing 440 billion euro bailout fund has been "enough" and the scale needs no further expansion. For all the eurozone bonds issued jointly by the various sectors, two people have indicated that the timing is not yet ripe. Merkel said that euro bonds "can not help us now".

Economists and market analysts believe that jointly issuing Eurobonds, collectively guaranteed debt, can share the risk of sovereign debt of a country and resolve the crisis of European debt spreading, but Germany and France do not approve of it immediately. The data show that the two countries' economic growth is slowing down. If they want to borrow money from Euro bonds, such as Greece, Ireland and other financially precarious Member States, financing The cost will increase.