Euro may have hope after all. France and Germany appears to have come to a point of covergence where a new treaty can be drawn up so that the European Monetory Union (EMU) is saved.
Dare carried a report on the European crisis with an infographic which helps you get to the key issues quickly.
This is the heartiest news from the west ever since the United Nations released a report that proclaimed possibilities of a double-dip recession.
French President Nicholas Sarkozy reportedly said: "France and Germany have chosen convergence. I will never come back from it." Sarkozy was speaking at Toulon in southern France. "Behind convergence there is peace. Behind divergence there will be confrontation."
The UN Report on World Economic Situation & Prospects says: "Inability to address sovereign debt problems in the euro area and the United States could trigger another global recession." The Euro zone has been reeling under huge sovereign debt crisis with Greece, Italy, Portugal and Spain in danger of default. France and Germany has agreed on a plan to rescue Greece but that wasn't enough since the debt crisis had spread to other countries rapidly.
If Germany had not relented, according to experts, Euro-zone would be history. The new announcement by the French President comes just in time.
Sarkozy also said, "We need to rethink Europe," repeating what Angela Merkel, German Chancellor had said a week back. So what happens now.
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- The EMU may have a wider role in individual member countries' fiscal policy. This way the gap of fiscal reforms to financial reforms is plugged.
- The ECB could become the last-resort lender; In case of default, ECB can step in and buyout the debt of a member country.
- Germany could insist that ecnomically stronger countries should not pay a steep penalty for saving weaker counterparts. So Greece, Italy, Spain and Portugal may have to ask their bond holders to take a partial hit.
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We are witnessing historic changes in Europe. This crisis may have been the best for the cause of Euro. Watch out for a history of Euro from Dare.
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