Euro crisis: France says ECB should play 'essential role'

24th November 2011, Comments 0 comments

France believes that the European Central Bank should play an "essential role" in resolving the eurozone debt crisis, Foreign Minister Alain Juppe argued on Thursday.

"It is urgent," he said, pressuring a reluctant Germany just hours before President Nicolas Sarkozy of France was to meet his German counterpart Chancellor Angela Merkel and Italian Prime Minister Mario Monti.

France argues that making the ECB the eurozone's lender of last resort -- on the model of the US Fed or the Bank of England -- would reassure markets that there is no risk of member states defaulting on their debts.

"The ECB should play an essential role in re-establishing this confidence," Juppe argued in an interview with France Inter radio, as Sarkozy, Merkel and Monti prepared to head to Strasbourg for crisis talks.

Germany is firmly set against the idea of monetising eurozone debt through the ECB, fearing this will dilute the bank's inflation-busting mandate.

Juppe admitted that France and Germany "had not been entirely in agreement" but insisted: "The situation is serious. We must not underestimate its gravity. It touches even the most solid economies."

© 2011 AFP

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