German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are making progress, even as "imbalances" in euro area economies show that the task is far from complete.
“We’ve come a good way along the mountain path, but we’re not completely over the mountain”, Merkel said after talks with Italian Prime Minister, Mario Monti. “I suspect that in the next few years there will continue to be new mountains -- there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.”
Merkel praised Monti’s “bold” efforts since taking office on November 16 to overhaul Italy’s economy, which include €20 billion in austerity measures and steps to deregulate services amid surging Italian bond yields that threatened to rip apart the currency region. Aided by European Central Bank liquidity measures, Italian 10-year borrowing costs have fallen to 4.89 per cent from a euro-era record of 7.26 per cent on November 25.
Monti reiterated Italy’s support for “adequate” financial firewalls for the region. Euro area finance ministers meeting in Brussels two days ago asked the European Commission, which has backed the largest possible rescue pool for distressed Member States, to propose options on the region’s firewall before a decision at a March 30-31 meeting in Copenhagen.
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