Essay about Brussels.Doc

777 Words Oct 28th, 2011 4 Pages
BRUSSELS (Reuters) - EU finance ministers sought to break a deadlock over shoring up European banks on Saturday, after euro zone countries called for steeper losses for holders of Greek bonds to help resolve a debt crisis that threatens to damage the global economy.
With France and Germany deeply divided over how to bolster the rescue fund that underpins the euro zone, leaders have scheduled a string of meetings in the next days to tackle Greece's debt and limit its impact on the banking system.
Euro zone finance ministers made some progress on Friday, agreeing that holders of Greek government bonds would need to take far more than the 21 percent haircut brokered in July.
"We have agreed yesterday that we have to have a significant
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DEEP DIVISIONS
There is also disagreement over how to recapitalize banks, in particular the extent to which taxpayers' money should be used.
"I think we should not use taxpayers' money," Sweden's Finance Minister Anders Borg told reporters on Saturday. "The guarantee system alone cannot solve the problems. We have to restore credibility with capital."
Deep divisions remain between France and Germany over the best way to scale up the EFSF.
German Chancellor Angela Merkel, French President Nicolas Sarkozy and European Council President Herman Van Rompuy and Commission President Jose Manuel Barroso, were due to meet late on Saturday to try to break the deadlock before Sunday's summit of leaders.
France is keen to rely on the EFSF and fears its credit rating could come under threat if the wrong method is chosen to scale up the fund to prevent contagion spreading to Italy and Spain, the euro zone's third and fourth largest economies.
Ratings agency Standard & Poor's said on Friday it was likely to downgrade France and four other states if Europe slips into recession. It was the second agency this week to cast doubt on France's rating after Moody's on Tuesday.
But Bundesbank president Jens Weidmann said in a

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