10 Oct 2011

Eurozone crisis talks in Berlin

4:22 pm on 10 October 2011

The German and French leaders will propose "important changes" to the way the eurozone operates after talks on controlling the bloc's debt crisis.

German Chancellor Angela Merkel and French President Nicolas Sarkozy say they will unveil a comprehensive package to tackle the eurozone's debt crisis by early November.

The leaders said the aim is to address the problems of the worst-hit country, Greece, and to propose ways of recapitalising banks affected by the crisis, the BBC reports.

Mr Sarkozy said they are also seeking to increase cooperation between eurozone countries, through treaty changes.

The nations were "determined to do the necessary to ensure... recapitalisation of Europe's banks", Mrs Merkel said.

Germany and France have differed over how to recapitalise Europe's banks, said by some to require between €100 billion and €200 billion to withstand the sovereign debt crisis.

Paris is believed to want to use the eurozone's bailout fund - the European Financial Stability Facility (EFSF) - to recapitalise its own banks, while Berlin is insisting the fund should be used as a last resort.

French banks are seen as over-exposed to Greek, Italian and Spanish debt.

However, speaking after the talks in Berlin, Mr Sarkozy said it was "not the moment" to go into the agreement's details but said that the Franco-German accord was "total".

The leaders suggested that their package of proposals would include a plan for recapitalising European banks, accelerating economic co-ordination in the eurozone and dealing with Greece's debt problems.

Meanwhile, talks are continuing over the latest bailout tranche for Greece, which could run out of cash by mid-November.

The European Commission, the European Central Bank and the International Monetary Fund are considering whether to release about €8 billion to help the Greek government pay its bills.