Financial and economic situation in the Euro Area
Paris, October 11, 2011
The meeting between Chancellor Angela Merkel and President Sarkozy in Berlin last Sunday was fruitful. The Head of State and Chancellor agreed to conclude a comprehensive agreement before the end of October – that is, before the G20 meeting in Cannes on 3 and 4 November.
What are the main features of this comprehensive agreement? First of all, an agreement to strengthen the capital structure of banks in Europe. As for the French banks, they’re committing themselves to increasing their own-funds ratio to 9% of their balance sheet, instead of the 7% expected in 2013. We’ll get there by mobilizing the revenues of the banks themselves, which earn money, as well as private capital and – if necessary, as a last resort – public capital.
Second important decision: we’re going to support Greece. We won’t ditch Greece, because a default by Greece would set in motion a process fatal for the whole Euro Area. The European Financial Stability Facility, with the troika – i.e. the European Union, the International Monetary Fund and the European Central Bank – will take the necessary decisions to that end.
Third decision: an acceleration of the economic integration of the Euro Area, with major modifications to the area’s governance, modifications that will be developed before the European Council, which has been postponed until 23 October.
That’s the bulk of what I wanted to tell you. I don’t really want to go into the details, but I’d simply like to add that, far from the ridiculous concept of “deglobalization” – only in France has such a concept been invented – and far from an illusory neo-protectionism that has no chance of seeing the light of day at European level, France and Germany are closely united in an effort to strengthen the Euro Area and the European enterprise, which are the best protection for French people against the crisis./.
Also see here a communiqué issued by François Fillon, Prime Minister, concerning the future of Dexia Bank.