FRANCE and Germany are at loggerheads over the role of the European Central Bank (ECB) in solving the debt crisis, it became clear yesterday.
German Chancellor Angela Merkel conceded that Germany was prepared to surrender “a little bit of sovereignty” to address the problem, yet she reiterated her view that current EU treaties do not give the ECB permission to intervene to effectively monetise the debt problem by printing cash to bail out countries directly.
However, she repeated that Germany supports opening up the treaties to negotiation.
French finance minister Francois Baroin, by contrast, was quoted in a French newspaper expressing support for the ECB to take a more active role. “We are favourable to the intervention of all the European institutions, including the ECB, to achieve the best responses to the crisis,” he said, blaming Berlin’s reluctance on “historical reasons”.
As politicians wrangled, the ECB was suspected of intervening to prevent Italy’s 10-year debt yields from rising higher than seven per cent, where they fluctuated around for most of yesterday. French ten-year yields also stayed near 3.7 per cent, which Baroin said was unjustified given France’s fiscal policy.