Euro-area leaders may complete their new budget rulebook by Jan. 30, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis.
German Chancellor Angela Merkel and French President Nicolas Sarkozy outlined the increased pace of their response as the financial crisis that began in Greece in 2009 entered its third year amid concern that the single currency itself was in doubt.
“There is a good chance that we can sign the debt brakes and everything that’s connected to it already in January, but at the latest in March, and that we’re making really good progress in negotiations,” Merkel said at a joint press conference with Sarkozy after they met in Berlin today. “Germany and France made a substantial contribution to this.”
The leaders of Europe’s two biggest economies are fleshing out a rulebook for budgetary discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17- member euro area. At their first meeting of 2012, they repeated their endorsement of a financial-transaction tax and urged Greece to complete its debt writedown with creditors as soon as possible.
The euro gained 0.2 percent to $1.2744 as of 2:48 p.m. in Berlin after the meeting. European stocks fluctuated and U.S. stock futures were little changed.
Talks With Lagarde
Merkel said that Greece would be the focus of talks with International Monetary Fund Managing Director Christine Lagarde in Berlin tomorrow.
“The second Greek program, including the debt restructuring, has to be carried out quickly now because otherwise it won’t be possible to pay out the next tranche for Greece,” Merkel said. “We want Greece to stay in the euro,” she said. “However, Greece really has to implement it’s the commitments made to the troika,” of the IMF, the European Commission and the European Central Bank.
Sarkozy said that he wants to take the lead in enacting a tax on financial transactions. Merkel, who favors a Europe-wide levy, said that she might back a euro-area transaction tax.
For all the push to accelerate their efforts, resolving the crisis is a long-haul task and must be tackled “step by step,” she said.
“The one single summit that solves all the problems doesn’t exist,” she said. “There also isn’t a one-dimensional solution. It’s budget consolidation, it’s ability to innovate, it’s competitiveness, it’s the focus on employment, it’s the diversity of our industrial base. We have to work on all of it.”
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