EU's weak economies 'to be sanctioned'

German Finance Minister Wolfgang Schaeuble (L) with his French counterpart Christine Lagarde

Source: Press TV
http://www.presstv.ir/detail.aspx?id=135732&sectionid=351020605

France and Germany have signed a joint declaration on tightening punitive measures against European Union countries that fail to curb their soaring budget deficits.

The two countries sent their joint proposals to the EU on Wednesday, calling on the 27-member bloc to speed up the process it deems necessary for the establishment of economic convergence.

According to AFP, the declaration also called for the imposition of sanctions on countries that undermine the stability within the EU's financial regulatory system.

The declaration was issued as French daily Le Monde reported on Wednesday that President Nicolas Sarkozy made an appeal for the convergence of fiscal systems in France and Germany. The proposal comes at a time when the majority of EU member states including Spain, Italy, Portugal, and Greece are undergoing a period of financial meltdown.

The EU countries' budget deficits are exceeding the standard level defined by the European Union, forcing numerous heads of states to introduce unpopular fiscal austerity measures in their respective countries.

Meanwhile, German Finance Minister Wolfgang Schaeuble expressed confidence that the stiffening of rules and regulations and conducting EU-wide "stress tests" on banks would revive confidence in the euro currency.

The move comes as critics of the plan argue that the "stress tests" are not strict and efficient enough to stave off the economic turmoil that has hit the European countries.

German Chancellor Angela Merkel has brushed off criticism against the tests, describing the measure as "very realistic."

The tests are aimed at determining how well the banks would cope while faced with further shocks such as weak economic growth or a European country defaulting on its debt.