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EU leaders delay crisis decisions

Friday, October 21, 2011 - 02:01

Oct. 21 - As the world looks to Europe to solve the euro zone crisis, European leaders say decisions will be made by Wednesday at the latest, rather than at Sunday's summit as hoped. Kirsty Basset reports.

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Another delay, and another summit. France and Germany say a comprehensive solution to the euro zone crisis will be announced no later than Wednesday now, rather than at an EU summit on Sunday as initially hoped. One of the ways leaders are looking at easing the crisis and preventing contagion, is by boosting the resources of the euro zone bailout fund, the EFSF. But France and Germany have different ideas on how to do this. Paul Taylor is Reuters' Europe editor. (SOUNDBITE) (English) PAUL TAYLOR, REUTERS EUROPE EDITOR, SAYING: "The French think the only way you can do it sensibly is to involve the European Central Bank, both Germany and the European Central Bank say that is politically illegitimate, that essentially it is getting the central bank into dangerous territory of financing governments which they are not supposed to do. So that is a fundamental difference." Another point of contention between the two countries is the extent of the writedown that banks exposed to Greek debt might be asked to take. Sarah Hewin is a senior economist at Standard Chartered. (SOUNDBITE)(English) SARAH HEWIN, SENIOR ECONOMIST AT STANDARD CHARTERED SAYING: "The French banks are much more exposed to Greece and to other peripheral countries, compared with the German banks. And so a larger haircut will have a disproportionate impact on the French banks. The French have been pressing for 30 per cent, the German up to 60 per cent. So it's likely that you'll get some sort of compromise which is perhaps in the 40-50 per cent range." A statement by German Chancellor Angela Merkel and French President Nicolas Sarkozy said an ambitious, global response would be forthcoming, with the proposals under consideration to be studied in detail on Sunday, and then definitively adopted on Wednesday. The rest of the world is watching anxiously for an outcome, as the crisis has the potential to threaten the global economy. Kirsty Basset, Reuters.

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EU leaders delay crisis decisions

Friday, October 21, 2011 - 02:01