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Eurozone Big 4 meet ahead of summit

Eurozone Big 4 meet ahead of summit
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The eurozone crisis fire-fighting continued on Tuesday as the finance ministers of the region’s four biggest economies – Germany, France, Italy and Spain – were due to hold unscheduled talks.

The finance chiefs, meeting in Paris, were to discuss coping with the crisis in the short term, and closer long-term fiscal and banking integration.

The talks come as Cyprus – with large exposure to Greece’s problems – joined Greece, Ireland, Portugal, and Spain – in asking for emergency funding from its eurozone partners.

The financial markets are nervous, but the new French Finance Minister Pierre Moscovici was upbeat, despite the deepening crisis: “Francois Hollande’s election really changed things in Europe. A 120 to 130 billion euro growth package has been adopted, with our propositions. These are the right steps. There’s also a bank package with mechanisms for bank recapitalisation to address the banking system’s difficulties. And there is integration – which in the long term – will lead to the euro obligations that we’ve talked about.”

Ahead of a full EU summit on Thursday, the meeting is supposed to nail down agreement, particularly between its two biggest members, Germany, which wants financial discipline, and France, which wants the emphasis on measures for growth.

European Commission President Jose Manuel Barroso stressed just how much was at stake. In a speech in Brussels he said: “It is not only economic integration, it is also the overall economic confidence in the euro area, and indeed, our commitment to the European project. This is why we need to be bold and define the way forward.”

A report prepared by the EU’s top four officials suggests the euro zone could create a treasury for the single currency and jointly issue euro bonds in the medium term as the final stage of a fiscal union.

However on Monday, German Chancellor Merkel, who leads Europe’s biggest economy and the main contributor to its bailout funds, again ruled out any sharing of debt or bank liabilities as “economically wrong and counter-productive”.