European leaders meet over future of eurozone

Published on 22/06/2012 14:31

EUROPEAN leaders face crunch talks today over the future of the region, just hours after Moody’s downgraded 15 of the world’s largest banks.

The summit in Rome today, between Italy, France, Germany and Spain, will see a proposal put by Italian Premier Mario Monti to use a bailout fund to buy sovereign debt to bring down interest rates for countries like Spain and his own.

Meanwhile, the head of the International Monetary Fund has increased the pressure on Angela Merkel by backing a series of measures to pull Europe out of its crisis which the German Chancellor has strenuously opposed.

Christine Lagarde told the leaders of the 17 countries that they should consider jointly issuing debt, aiding troubled banks directly and relaxing strict austerity conditions on countries that have received aid.

“We are clearly seeing additional tension and acute stress applying to both banks and sovereigns in the euro area,” Mr Lagarde said.

Asked what Germany would think of her suggestions, she smiled and said: “We hope wisdom will prevail.”