The EU's finance chiefs of the eurozone's 4 biggest economies will hold talks in Paris Tuesday evening to work to narrow differences on the currency area's future after tiny Cyprus became the 5th member to request a bailout.
Ministers from Germany, France, Italy and Spain will discuss how to manage the crisis in the short term and proposals for closer long-term fiscal and banking integration to prepare for a European Union summit starting Thursday.
Financial markets are on edge and international pressure for decisive action is rising but the summit, the 20th since the bloc's debt woes began in early Y 2010, is not expected to produce a long lasting solution to the crisis.
Tomorrow there is a meeting, which will be very important, between French President Francois Hollande and German Chancellor Angela Merkel, and this evening I will receive the finance ministers... along with the European Commissioner, French Economy Minister Pierre Moscovici said.
A report prepared by the EU's top 4 officials suggests the eurozone could create a treasury for the single currency and issue euro bonds in the medium term as the final stage of a fiscal union.
However Ms.Merkel, who leads Europe's biggest economy and the main contributor to its bailout funds, again ruled out Monday any sharing of debt or bank liabilities as economically wrong and counter-productive.
The finance ministers' session was called on short notice in a rush to repair damage from a public rift between Ms Merkel and leaders of the other 3 states when they met in Rome last Friday.
Tiny Cyprus, the 17-nation currency area's 3rd smallest economy with just 1-M residents, added drama to a struggle by applying for rescue loans Monday
The East Mediterranean island has an outsize financial sector heavily exposed to neighboring Greece, and may need up to 10-B Euros in emergency financing, more than 50% its 17.3-B Euro annual output.
The amount is easily within the range of the European Financial Stability Facility (EFSF) bailout fund, but it sets an awkward precedent and may lead to demands for collateral or for private bondholders to take a write-down as they did in Greece. Stay tuned...
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.