A meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel has resulted in a call for a closer and more united monetary policy in the eurozone. They have come to the conclusion that a more integrated economy in the eurozone will help resolve the debt crisis and believe that this will be a gradual progression. In addition, they have suggested that financial transactions should be taxed in order to increase eurozone revenue.
Ms Merkel and Mr Sarkozy have further revealed that they want meetings between the 17 eurozone leaders to be held every six months.
The reaction to these announcements has generally been negative as some investors have claimed that they were hoping for more detailed and specific plans which would boost their confidence that the eurozone will soon be on its way to economic recovery. Since the announcements the global market has began to suffer from the resulting disappointment. The Dow Jones Industrial Average in New York fell by 1.3% following the press conference which, despite the fact it later recovered, is worrying. Trading in Europe had already closed by the time the conference was held.
With regards to the possibility of introducing Eurobonds to aid the eurozone in its recovery, which has been backed by many investors and economists, Ms Merkel agreed that it might be the way to go but it would not be until after the process of monetary union, which could be a long time.
Ms Merkel stated that balancing budgets should be a requirement preserved by all governments in the eurozone, meaning that each country will have to live within their means before they can consider the possibility of Eurobonds. She believes that this in the long term will inspire confidence in investors.
It was also suggested that corporation tax is equalised across the eurozone but it is probable that the Republic of Ireland will resist this policy.