Following are highlights of a news conference on Wednesday by German Chancellor Angela Merkel and Italian Prime Minister Mario Monti following their talks in Berlin on the euro zone debt crisis.
Both in terms of the speed and the substance of these measures, I believe ... they will strengthen Italy, will improve its economic perspective. We have followed with great respect how quickly the measures are being implemented. The work of the Italian government is being honoured. We have said from the beginning that we want to work closely together among the big economies in the European Union and especially in the euro zone. I don't need to stress that that doesn't mean that we want to exclude the economies that aren't quite as big but I believe it is particularly important that everyone of us makes his contribution to the stabilisation of the euro zone.
ON FISCAL COMPACT
We talked about how it is positive that the fiscal compact has already made good progress in negotiations. There is work to be done but there is a good chance that we can expect significant progress or a political conclusion already on January 30
We talked about the overall situation in the euro zone. The first solution that needs to be found here in the first half of the year is that we create the preconditions for a second Greek package, that means that the talks with banks are being pushed so that the question of Greece can be solved rationally, so that we can then focus on structural reforms in the euro zone as a whole.
We also talked about how we can strengthen or make operable the possibility of solidarity -- ESM and EFSF.
We want to conclude negotiations on the ESM quickly, with the new instruments included. And we want, if necessary, and Germany would be ready to do this if the others do it, to perhaps pay in more capital at the start of the ESM, because if capital is invested is sends an important signal to the markets.
In the future, we will need more Europe, not less. That means opening ourselves in the internal market.
ON SUMMIT ON JAN. 30
We also talked about the next summit, ... which should concern itself with the question of how we can advance growth and employment beside (the topic of) budget solidity.
I want to stress there are measures that cost money and those growth-supporting measures that are in the structural area, so it's important we talk about labour law, that we exchange experiences among one another.
It was a very important exchange. It took a little longer, not because we fought in any way but because we had a lot to discuss. I have the impression we have a very good cooperation between Germany and Italy. We also agreed again that France, Germany and Italy will meet in Rome on January 20 and continue our discussions.
Today in the world, through globalisation and more freedom we have many populations working towards becoming prosperous. If we want to stay prosperous on this continent then we will have to be innovative. We are not doing all this to make things difficult for some but to ensure we are strong and competitive.
ON FINANCIAL TRANSACTION TAX
I want to comment on the financial transaction tax as I talked about it on Monday and pointed out my personal opinion then, which is essentially founded in a decision taken at a party meeting a few weeks ago that if necessary we (the CDU) can imagine it in the euro zone but clearly as the head of a government, you need to have the agreement of the coalition partners... Therefore, when I spoke on Monday, I made it clear it was a personal opinion.
Everyone in the government is of the opinion we should (try to get it) on the basis of 27. We will negotiate that until March. There is no agreement (in the coalition) on the question of an introduction in the euro zone and therefore the government cannot represent that position, no matter what I said before.
ON AUSTERITY MEASURES
I illustrated also to the Chancellor the state of mind with which Italians broadly supported a very hard series of measures that the government had to adopt. This was a very mature attitude by Italians, and it merits not reward by Europe... but it merits recognition by Europe, which doesn't have to fear any more that Italy as possible source of contagion for the euro zone. On the contrary, it can count on an Italy ready to fully do its part by Germany's side, by France's side, and by the side of the other countries in guiding Europe towards stability and growth.
So that Italy can always more, with always greater confidence, do its part in this situation, it's necessary that the perception of risk that still surrounds the euro zone is faces as quickly as possible, and won.
ON WORKING TOGETHER
Germany, France and Italy can together closely cooperate to offer paths toward solutions to the whole EU and its institutions.
I think the European Union remains the most beautiful construction put in place by humanity, to which both Italy and Germany have made fundamental contributions since the very first day.
Attention must be turned to growth, a growth that must be founded above all on structural measures in each country, and also adequate European policy.
Germany for long time has offered to every European country concrete proof of how public budget discipline and an economy founded on market principles are the best recipe for growth.
Italians are hoping that before many quarters that will be needed before economic policy can be transformed into economic growth, much sooner, that in the financial markets there can be a decrease in interest rates could have been justified when markets were diffident, rightly or wrongly, about Italian economic policy, but not anymore.
What Europe can do is facilitate the transformation of good policies into lower interest rates.
Germany and Italy don't want an ephemeral growth that is based on occasional stimulus measures as has happened many times in the past, and that often created deficits, inflation and other pathologies. We want growth built on a healthy economic structure. It is up to each individual country to put this healthy structure in place. Germany did and is doing reforms that are one of the reasons for its very brilliant competitiveness.
Italy did and is intensifying at this very moment its own reforms, but no matter how big a country, and no matter how much one does at home, for there to be sustainable growth that creates jobs there has to be a favourable European context. The European context, in our opinion, can and must become more favourable... so that it can permit in good time an ordered lowering of interest rates, and so that there can be greater European integration. This is a work in progress that we will return to in Rome on Jan 20.
ON INTEREST RATES
In the financial markets, high interest rates could have been justified when markets were diffident about Italian economic policy, but not anymore, especially after representatives of those same markets have said they appreciated the efforts made.
The European Union remains the most beautiful construction put in place by humanity. The European context must become more favourable, by permitting in good time a lowering of interest rates and a greater integration of the EU.
ON TOBIN TAX
I was one of professor Tobin's students and one time, I think in 1980, he told me that the Tobin tax idea was like the Loch Ness monster. It's spotted, then it disappears, and then a while later it reappears.' I think that in this historic moment it could make more sense now than it would in other periods.
Italy was against it. My government considers it opportune to be more open. We are willing to back this initiative on an EU level. The ideal situation would be to have it globally. It could make sense if it were among all 27 EU countries. I'm not sure if it makes sense only at euro zone level.
(Reporting by Berlin and Rome bureaus)