Hollande Says Europe Needs Mechanisms Against Speculation
French President Francois Hollande said that Italy has been unjustly attacked by financial markets and that Europe needs mechanisms to counter speculation.
Speaking in Rome today at a joint press conference with Italian Prime Minister Mario Monti, Hollande said both leaders agreed that measures are needed to spur economic growth in Europe. Growth is necessary for debt reduction and doesn’t contradict budget discipline, he said.
“Increases in interest rates are not justified in countries like Italy that have made serious efforts and have a budget surplus,” Hollande said. “You can’t ask people to make efforts when there are no rewards for the effort.”
Italy’s 10-year bond yield has risen almost 40 basis points since June 9 when Spain said it would request as much as 100 billion euros ($126 billion) in emergency loans from EU allies to shore up its banks. The yield rose to the highest in almost five months yesterday before declining 9 basis points today to 6.13 percent.
The rise in bond yields “gives the unpleasant impression that the things that are being done aren’t moving in the right direction or that they aren’t sufficient, when it’s exactly the opposite,” Monti said.
Europe must do its duty in helping to deliver economic growth for Greece, which has made enormous efforts during its bailout program, Hollande said. Monti said he and Hollande agreed that Greece needs to remain a member of the single currency.
A French official told reporters stimulus measures that could be made available immediately, including project bonds and adding capital to the European Bank for Reconstruction and Development, may add up to as much as 100 billion euros.
Europe can improve its crisis response, and has the means to control its future, Hollande said.
“Until we have a strong stable mechanism with adequate resources, we will be vulnerable,” he said.
Many ideas are on the table to combat the crisis, he said, citing a banking license for the euro region’s permanent rescue fund, which would give it “greater power.”
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