France and Germany seek changes in EU treaties

Germany has declined to be drawn into playing a bigger role in solving Europe's debt crisis as called for by the European Central Bank (ECB).

However it won the support of France and Italy in its bid to bring about a closer union of the trouble 17-nation eurozone.

Germany, Europe's biggest economy and the main financier of the eurozone's three bailouts remains opposed to the ECB using its financial muscle to ease a debt crisis that is being viewed with alarm as it shows signs of spilling over to big economies, like Italy.

Rather than resort to the ECB's cash-printing power, the richest of the countries of the eurozone preferred to use political tools to resolve the crisis, with Germany and France agreeing yesterday to push for changes to EU treaties to align the eurozone's economic policies more closely.

German chancellor Angela Merkel, who met French president Nicolas Sarkozy and Italy's new premier Mario Monti in Strasbourg, yesterday, said with the treaty changes, the question of a fiscal union was being dealt with, as also a deeper political cooperation, but it had nothing to do with the ECB.

With many under the impression that the ECB was the only institution capable of allaying market fears, Merkel's steadfast opposition to a larger role for the ECB hit market sentiment hard yesterday, and stocks all over Europe fell again after an uptick in the morning.