120211 anglea merkel
German Chancellor Angela Merkel attends debates at the Bundestag after giving a government declaration on the Euro and the current eurozone debt crisis on December 2, 2011 in Berlin, Germany. - 

Mitchell Hartman: In Europe, Germany's chancellor, Angela Merkel, this morning is outlining a new future for economic policy, which is reassuring investors and driving down the cost of government borrowing.

From London, Marketplace's Stephen Beard has our story.

Stephen Beard: The crisis was caused by governments in the eurozone spending more money than they could afford. Chancellor Merkel today called for a new legally binding set of rules to control that spending. There would be close scrutiny of the national budgets by the European Commission in Brussels, and stiff fines for any country that broke the rules.

Yesterday, the head of the European Central Bank said the bank would intervene further to help the euro, if there were such moves towards closer fiscal union.

Steve Barrow is a currency strategist with Standard Bank in London. He says investors have been slightly reassured now over the most fundamental question in this crisis.

Steve Barrow: Will the ECB use its unlimited resources to aid the eurozone? That seems, perhaps, more likely if there's better budget discipline in the eurozone than there is right now.

Chancellor Merkel will discuss the planned budget reforms with the French president on Monday. They'll both present the plan to a crucial EU summit one week from today.

In London, I'm Stephen Beard for Marketplace.