Tags: APFN | EU | Europe | Economy

EU Leaders Agree Small Steps to Buttress Euro Currency

EU Leaders Agree Small Steps to Buttress Euro Currency

Friday, 14 December 2018 12:37 PM

FRANKFURT, Germany (AP) — European leaders agreed Friday to press ahead with a limited, common eurozone budget and other steps to strengthen the currency union's resistance to downturns and crises.

The budget proposal leaves its size undefined and it appeared to fall short of more sweeping ideas pushed by French President Emmanuel Macron.

The European Union leaders said that finance ministers would work out the precise features of the budget and agree on them by June.

Macron has pushed for a large eurozone budget that could support member states that run into economic trouble. That would help close a key vulnerability of euro monetary union, which has one currency but 19 different governments. The euro bloc's weaknesses in adjusting to trouble were exposed during a financial and economic crisis that threatened to break up the currency union in 2010-2012.

The leaders said in a statement Friday that the eurozone fund would be part of the overall EU budget, suggesting it is likely to be smaller than Macron's proposal. He has called for several percentage points of gross domestic output but the entire EU budget is only about 1 percent of GDP. The leaders' statement also defines the budget's purpose as helping making economies more competitive and similar in the way they function and omits mention of stabilizing countries in recession — a key lack for the euro.

The leaders also approved giving additional financial firepower to the EU's fund that would help wind up or restructure failed banks. The proposal would allow the fund to borrow from the eurozone's crisis bailout fund to ensure it has enough money to handle major trouble in the banking sector. The statement added that implementation would be based on progress cleaning up the finances of shaky banks.

There was no mention in the statement of progress toward EU-wide deposit insurance, which aims to strengthen the banking system by reassuring depositors their money is safe even if national backstops fall short. The proposal has been resisted by Germany, which has pushed to first ensure that banks purge their finances of hidden losses from bad loans.

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European leaders agreed Friday to press ahead with a limited, common eurozone budget and other steps to strengthen the currency union's resistance to downturns and crises.The budget proposal leaves its size undefined and it appeared to fall short of more sweeping ideas...
APFN,EU,Europe,Economy
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2018-37-14
Friday, 14 December 2018 12:37 PM
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