German, Italian leaders pledge to protect eurozone
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German, Italian leaders pledge to protect eurozone

Last Updated: Sunday, July 29, 2012, 21:54
 
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German, Italian leaders pledge to protect eurozone
Zeebiz Bureau

Berlin: German Chancellor Angela Merkel and Italy's Premier Mario Monti said that Germany and Italy will do everything to protect the eurozone.

Merkel and Monti spoke by phone on Saturday agreeing to do everything to protect the eurozone, German government spokesman Georg Streiter said.

The leaders have also added a string of assurances over recent days that Europe is determined to get a grip on the continent's debt crisis but their governments again gave no details of any action.

Today's statement from Germany and Italy came before markets open for a week in which close attention will be focused on Thursday's meeting of the European Central Bank's policy-setting governing council.

Last Thursday, ECB President Mario Draghi said the ECB would do "whatever it takes" to preserve the euro — and markets surged on hopes of action.

Monti's office said they agreed to "take all necessary measures to protect the eurozone."

That was nearly identical to a statement issued Friday by Merkel and French President Francois Hollande, which came in the wake of Draghi's comments.

None of the leaders have said anything about any specific action. But the comments raised expectations that the ECB might step in to buy Spanish and perhaps Italian government bonds to lower the countries' borrowing costs, which have been worryingly high in recent weeks.

Another possibility might be for the eurozone's temporary rescue fund, the European Financial Stability Facility, to buy bonds, though Merkel's finance minister, Wolfgang Schaeuble, has dismissed talk that Spain might apply to the fund for such help.

He told the Welt am Sonntag newspaper that "there is nothing to this speculation."

Italy and Spain have the eurozone's third- and fourth-largest economies respectively, behind Germany and France.

Merkel and Monti agreed that decisions made by last month's European Union summit "must be implemented as quickly as possible," Streiter said, again echoing Friday's Merkel-Hollande statement.

Those included allowing Europe's bailout fund — once a new, independent bank supervisor is set up, to give money directly to a country's banks, rather than via the government.

Countries that pledge to implement reforms demanded by the EU's executive Commission also would be able to tap rescue funds without having to go through the kind of tough austerity measures demanded of Greece, Portugal and Ireland.

With Agency Inputs



First Published: Sunday, July 29, 2012, 21:54


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