Those wanting Europe to act must accept finance tax: Merkel
Non-eurozone countries wanting rapid action from Europe to solve its debt crisis should drop their opposition to a financial transaction tax, German Chancellor Angela Merkel said Friday.
"It is not possible that those outside the eurozone who are asking Europe to act are at the same time refusing a financial transaction tax," Merkel said in an allusion, among others, to the United States and Britain.
A number of countries in the so-called Group of 20 or G20, such as Japan and Brazil, favour the creation of such a tax, while others like the US and China reject it.
Members of the 27-nation European Union are similarly divided on the idea.
In a speech to a trade union congress in the southern German town of Karlsruhe, Merkel said that Germany's priorities for the upcoming G20 meeting in Cannes in November would include tighter financial market regulations and how to prevent unstable banks from damaging the wider banking system.
"There are two key issues for the G20 to discuss. The first is how can we prevent the spread of less regulated financial markets... and how do we deal with shadow banks and create a framework that prevents a troubled bank from hurting the whole sector," she said.
Merkel said the roots of Europe's current debt crisis went back "years, even decades" and, as a result, "cannot be solved overnight."
"There's not one single solution, one big-bang plan of action that will solve everything," she said.
The German leader also dismissed the idea of eurobonds, as proposed by a number of European officials, where eurozone countries issue debt jointly.
"They are no wonder drug" and would lead to higher borrowing costs in Germany, she said.
Financial analysts, along with some nations such as Luxembourg and Belgium, argue that creating joint bonds would be the quickest way out of the debt crisis that has engulfed the eurozone for more than a year.
Germany which enjoys the eurozone's lowest funding rates, is strictly opposed, however, arguing such bonds would discourage profligate governments from cleaning up their books.
© 2011 AFP