European Debt Crisis

Angela Merkel: European Central Bank won’t change

Stephen Beard Nov 24, 2011

Jeremy Hobson: France and Germany want to change European Union treaties to make it easier to deal with Europe’s debt crisis. That’s the latest solution out of a meeting today in Strasbourg, France. As for the problem — well, it’s getting worse. Portugal had its credit rating downgraded to junk this morning. And of course the eurozone grand poobah — Germany — isn’t feeling all that great right now either.

Marketplace’s Stephen Beard reports.

Stephen Beard: Yesterday, the German government failed to sell all the bonds it wanted to sell. Many traders said this was a sign that the fears about debt have now reached the eurozone’s strongest economy.

Simon Tilford is with the Centre for European Reform. He says this could give the French president some leverage over the German leader.

Simon Tilford: I certainly think that Sarkozy will feel embolded by the fact that the crisis has spread to the core, and will seek to steer the discussion away from this obsessive focus with fiscal austerity as a solution to the crisis.

He says the French are now stepping up their pressure on the Germans to drop their opposition to a new expanded role for the European Central Bank. The French want the ECB to act more like the Federal Reserve — to print money, and buy vast quantities of government debt.

But after the meeting in Strasbourg, the German leader was unmoved. Angela Merkel said there would be no change in the role of the ECB.

In London, I’m Stephen Beard for Marketplace.

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