German Chancellor Angela Merkel and French President Nicolas Sarkozy on Sunday pledged to do all that is needed to stabilize the euro zone and to present a comprehensive package of measures by the end of October.
“We are determined to have a sustainable and comprehensive solution by the end of this month because Europe should have resolved its problems by the G-20 summit in Cannes [Nov. 3-4],” said Sarkozy.
The leaders of Germany and France also said they would ensure that European banks had sufficient capital to face any crisis-related shocks.
“We are determined to do what is necessary to guarantee the recapitalization of our banks,” Merkel told reporters ahead of a working dinner with Sarkozy. “We will make proposals in a comprehensive package that will enable closer cooperation between euro-zone countries that will include changes to treaties.”
Sarkozy said: “We also agree to strengthen the structure of capital of banks in Europe. Our agreement is total and we will work hand in hand with European authorities on this subject.”
Merkel and Sarkozy declined to provide any further details about their thinking on how to recapitalize European banks.
“It’s not the moment to go into details of all questions. Other meetings,” said Sarkozy.
Responding to a question about the possibility of a Greek default, Merkel and Sarkozy reiterated that they need to await the “troika” report and that they have confidence in that body, which consists of the European Commission, the European Central Bank and the International Monetary Fund as they seek a solution to Greece’s sovereign-debt problem.
“We think the troika will propose a sustainable solution for Greece,” said Sarkozy. “We are working closely with the troika. Greece is part of the euro zone and we will find solutions to ensure the financial stability of Europe and a long-term solution for the Greek problem.”
Without going into detail, Merkel and Sarkozy also suggested that deepening political union within Europe was on the agenda and suggested that there could be changes to existing treaties to improve the integration of the euro zone.
Sarkozy said: “We must propose an acceleration of integration in the euro zone that will include significant changes so the European system is more effective.”
(source: Dow Jones)
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