EU to reduce imbalances in euro zone

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EU leaders have agreed to work for closer economic cooperation, as the debt crisis is widening in the bloc.


French President Nicolas Sarkozy and German Chancellor Angela Merkel joined forces on Friday in announcing plans to reduce the huge gaps among the regional economies, in order to stabilize the euro.


European leaders meeting in Brussels made progress on a system to help countries deeply in debt, but decided not to beef up the existing bailout fund.


The EU decided to establish the long-term European Stability Mechanism, known as ESM, at a summit in October. This week it was given the necessary legal basis. The EU leaders agreed to change the Lisbon Treaty to set up a permanent rescue mechanism for countries overwhelmed by debt after 2013.


The mechanism will provide rescue loans, but it will also force private creditors to assume some losses when a country is deemed insolvent.


French President Nicolas Sarkozy and German Chancellor Angela Merkel are to present new proposals in the new year to reduce the huge differences among the economies using the euro.


Nicolas Sarkozy, French President, said, 'We will need to go further to affirm within the eurozone the need for an economical policies convergence. There is a budgetary convergence, there is a stability pact, there are possibilities of sanctions for states which are failing to meet their commitments; we have probably to go further.'


Merkel says they have no firm ideas yet, but may look at stable budgets or compare social security systems across the region.


That will likely mean a bigger attachment to tough EU standards in


economic policy, social policy and possibly taxation - areas in which member states have long tried to maintain individual control.


Differences among the EU states, from powerhouse Germany to debt-saddled Greece came to the fore this year, as the EU had to bail out two members and held countless meetings to stabilize the euro.





Editor:Zhang Pengfei |Source: CNTV.CN

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