European Union leaders at a summit on this year’s euro zone debt crisis have agreed to have a permanent financial safety net in place by 2013. The European Stability Mechanism or ESM could loan to member states in distress, with private sector bondholders sharing some risk.
France has largely sided with Germany on how to tackle the crisis. President Nicolas Sarkozy after the summit said: “Doubtless we need to go further. That work will fill the first weeks of the new year, to put in place economic governance of the euro zone and convergence of economic policies.”
However, while Germany is against all the 16 euro countries financing a portion of their debt together, others, like Italy and Luxembourg’s Prime Minister Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, in principle support what are dubbed E-bonds.
Juncker said: “There were those who spoke out in favour of the basic outline I had proposed. Those ferociously opposed didn’t miss the chance to put their point across either. The idea is coming along. We’ll see how it turns out.”
“And,” says our Brussels correspondent Sergio Cantone, “the euro-bonds proposal seems to be taking shape. It wasn’t completely ruled out. On the contrary, the member states will think it over in the coming months. Yet among those against it, the strongest voice remains Germany’s.”