الرئيسية
European Central Bank (ECB) President Mario Draghi
arrives at a Eurogroup meeting at the European Union council
headquarters in Brussels November 29, 2011. REUTERS/Yves Herman
By John O'Donnell and Emmanuel Jarry, Reuters
BRUSSELS/TOULON, France (Reuters) - The new head of the
European Central Bank signaled on Thursday it stood ready to act more
aggressively to fight Europe's debt crisis if political leaders agree
next week on much tighter budget controls in the 17-nation euro zone.
In
France, President Nicolas Sarkozy called for a new treaty incorporating
tougher budget discipline, a European Monetary Fund to support
countries in difficulty and decisions in the euro area taken by majority
vote instead of unanimity.
Addressing supporters in the port
city of Toulon, Sarkozy said he and German Chancellor Angela Merkel
would meet next Monday to outline joint proposals to put to a December9
EU summit, seen as make-or-break for the 12-year-old single currency.
"Let
us not hide it, Europe may be swept away by the crisis if it doesn't
get a grip, if it doesn't change," Sarkozy said, warning that a collapse
of the euro would make France's debt unmanageable and wipe out people's
savings.
"We don't have the right to let such a disaster happen."
ECB
President Mario Draghi painted a dark picture of the state of Europe's
banking system, speaking a day after the world's major central banks
took emergency joint action to provide cheaper dollar funding for
starved European banks.
"A new fiscal compact would be the most
important signal from euro area governments for embarking on a path of
comprehensive deepening of economic integration. It would also present a
clear trajectory for the future evolution of the euro area, thus
framing expectations," he told the European Parliament.
Draghi
did not spell out what action the ECB might take, saying only a
commitment by political leaders to stricter budget discipline and
binding their economies more closely "is definitely the most important
element to start restoring credibility. Other elements might follow, but
the sequencing matters."
In the short-term, economists expect
the central bank to relieve pressure on banks and an economy heading
into recession by cutting interest rates next week and announcing
longer-term cheap liquidity tenders with easier collateral rules.
Markets are pricing in a 25 basis point cut to 1.0 percent on December
8.
Draghi, who faces some of the toughest decisions in the
currency's 12-year history after just one month in the job, said the ECB
was aware many European banks were in difficulty because of stress on
sovereign bonds, tight inter-bank funding markets and scarce collateral.
"Downside
risks to the economic outlook have increased," he said, noting that the
ECB's mandate was to maintain price stability "in both directions" -- a
rare indication that the bank is concerned about deflation risks as
well as inflation.
Sarkozy voiced similar sentiments in words
designed to reassure voters anxious about handing more power to
Brussels. He called for an "intergovernmental" Europe and made no
mention of the stronger role for the European Commission or the European
Court of Justice sought by Berlin.
"Sovereignty can only be
exercised with others. Europe doesn't mean less sovereignty but more
sovereignty because it gives us a greater capacity to act," Sarkozy
declared.
His Socialist opponents in next year's presidential election denounced an "austerity treaty" imposed by Germany.
Merkel
is due to outline her own vision in an address to parliament in Berlin
on Friday. Aides said the leaders conferred by telephone to ensure that
their speeches, while different in tone, would not be incompatible.
Sarkozy
avoided calling directly for massive ECB action to buy bonds of
troubled euro zone states or cut interest rates. But he said: "Naturally
the European Central Bank has a decisive role to play ... I am
convinced that faced with the risk of deflation with threatens Europe
the central bank will act."
Two years into Europe's debt crisis,
investors are fleeing the euro zone bond market, European banks are
dumping government debt, south European banks are bleeding deposits and a
recession looms, fuelling doubts about the survival of the single
currency.
The euro and European stocks extended gains after
surging on Wednesday upon the joint dollar liquidity move by the U.S.
Federal Reserve, the ECB and the central banks of Japan, Britain, Canada
and Switzerland.
Markets were cheered by strong demand at
Spanish and French bond auctions on Thursday. France's 10-year bond
spread over safe haven German Bunds fell below 100 basis points for the
first time since October 28 after peaking above 200 bps in mid-November.
A
group representing many of the world's top private banks added its
voice to the calls for action from the ECB. "The crucial role of the ECB
in ensuring normal liquidity conditions in the Euro Area sovereign and
financial debt markets cannot be overstated," the Institute of
International Finance's market monitoring group said in a statement.
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Euro zone in graphics http://r.reuters.com/hyb65p
Market disconnect graphic http://r.reuters.com/van64s
Interactive timeline http://link.reuters.com/rev89r
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NO MORE LOSSES?
EU
paymaster Germany is pressing for limited treaty changes to establish
coercive powers to veto national budgets in the euro zone that breach
agreed rules.
Berlin wants the European Commission to be
empowered to reject national budgets before they go to parliament and to
refer serial deficit offenders to the European Court of Justice.
Sources
close to the negotiations said Germany and France had yet to agree on
key issues including the role of the EU executive and court, with Paris
preferring an intergovernmental approach leaving the final word with
elected leaders.
In another apparent difference, Sarkozy called
for a guarantee that savers would face no further losses on European
sovereign bonds, and that writedowns for private creditors of Greece
would be a one-time exception.
Berlin and its north European
allies have so far insisted that private investors must accept the risk
of a so-called "haircut" on government bonds issued from 2013.
The
conservative Sarkozy's main challenger in next year's presidential
election, Socialist Francois Hollande, said on Wednesday that as
president he would never hand France's budget sovereignty over to
European judges.
German Finance Minister Wolfgang Schaeuble said
he would propose at the summit that EU states set aside sovereign debt
of over 60 percent of gross domestic product -- the EU treaty limit --
in special funds to be paid off over 20 years with national revenues.
Leaders
of Merkel's centre-right coalition agreed that Germany's opposition to
common euro zone debt issuance was non-negotiable, slamming one door
which France and other southern euro zone states have tried to open.
With
the ECB barred by treaty from acting as lender of last resort to the
euro zone or directly financing governments, EU officials are working on
ways to support states under bond market pressure, possibly via the
International Monetary Fund.
One idea under active consideration
is allowing euro zone national central banks affiliated to the ECB to
lend money to the IMF which could provide larger credit lines for Italy
and Spain on strictly monitored policy conditions.
In Greece,
where the euro zone debt crisis began in 2009, schools, hospitals and
public transport were paralyzed by a one-day general strike in protest
at the new national unity government's EU/IMF-imposed "starvation"
budget.
The strike is the first such test for new technocrat
Prime Minister Lucas Papademos, who has had little time to celebrate
since European finance ministers this week approved an 8 billion euro
tranche of aid to prevent Greece from going bankrupt.
(Additional
reporting by Paul Carrel in Frankfurt, Catherine Bremer in Paris, Noah
Barkin in Berlin, Emilia Sithole-Matarise in London, Lesley Wroughton in
Washington and Tatiana Fragou in Athens; Writing by Paul Taylor;
editing by Janet McBride)