16 November 2011

France, Germany clash over ECB role to stem crisis

France and Germany clashed over whether the European Central Bank should intervene more forcefully to halt the eurozone's accelerating debt crisis, after modest bond purchases failed to stop the rout.

Facing rising borrowing costs as its 'AAA' credit rating comes under threat, France appeared to plead for stronger ECB action, adding to mounting global pressure spelled out by US President, Barack Obama. "The ECB's role is to ensure the stability of the euro, but also the financial stability of Europe. We trust that the ECB will take the necessary measures to ensure financial stability in Europe", government spokeswoman, Valerie Pecresse, said after a cabinet meeting in Paris.

German Chancellor, Angela Merkel, made it clear that Berlin would resist pressure for the central bank to take a bigger role in resolving the debt crisis, saying European Union rules prohibited such action. "The way we see the treaties, the ECB doesn't have the possibility of solving these problems", she said. The only way to recover markets' confidence was to implement agreed economic reforms and build a closer European political union by changing the EU treaty, Merkel said.

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© Reuters