Nicolas Sarkozy, the French President, yesterday promised to defend the European single currency to the death, vowing that he would never allow it to be destroyed by economic crises or market speculators.
Mr Sarkozy said that both he and Angela Merkel, the German Chancellor, remained absolutely committed to the single currency project, not least because closer European integration had been the key to avoiding further conflict on the Continent in the six decades since the end of the Second World War.
The French President said that while there would need to be more work and further compromises to resolve the sovereign debt crises that have wreaked havoc in the peripheral members of the eurozone, including Greece, Ireland and Portugal, market speculation that the euro would collapse had proved wide of the mark.
"I remember reading six months ago that the euro was dead, that it would surrender, that it could not survive, but the euro is still here," Mr Sarkozy said. "Chancellor Merkel and myself will never drop the euro – we will never turn our back on the euro," he pledged. "The euro is Europe and Europe has brought 60 years of peace on our continent: we will never let the euro go."
Mr Sarkozy's passionate defence of the single currency will undermine those analysts who have argued that the political differences between members of the bloc, particularly on the issue of sovereign debt, would inevitably lead to weaker members leaving, or being forced out.
Nevertheless there remain serious doubts over how the eurozone debt crisis will play out this year. While Portugal's first two bond auctions of 2011 proved successful, speculation continues that it will eventually be forced to seek a bailout in the same vein as Greece and Ireland. That would be likely to lead to a crisis in Spain, where the cost of a rescue could prove too large, certainly for the mechanisms set up so far by the European Union.
Both France and Germany, however, have so far been reluctant to countenance large increases in the funds put in place for bailouts. Reforms that would see creditors to indebted countries suffer losses are also still at a delicate stage of negotiations.
Mr Sarkozy, speaking to the World Economic Forum in his role as President of the G20 group of the world's largest economies, did not address such controversies directly. However, he said that members of the G20 would have to move away from confrontation as they sought to further reform the world's financial systems in the light of the credit crisis.
Mr Sarkozy, who reiterated calls for an international transactions tax on banking – a measure opposed by leading G20 nations apart from France – said that with the darkest days of the crisis now in the past, it would be much tougher to forge international agreements on reform.
But he warned that difficult questions remained on monetary systems, currency, the global balance of economic power and banking reform.
Dimon attacks unfair 'denigration' of bankers
Jamie Dimon, the chief executive of JPMorgan Chase, yesterday accused "ill-informed" critics of banks of tarring them all with the same brush to create an atmosphere of hostility towards financial institutions, writes David Prosser.
Mr Dimon, whose bank emerged from the credit crunch as one of the most impressive survivors of the crisis, said the banking community was doing its best to lend more, had not sought to block reform, and resented the indiscriminate anger it faced from policymakers and the media.
"It is a gross misconception that all banks would have failed [without support to the system at the height of the crisis]", he told the World Economic Forum in Davos. "All banks are lumped together and that is not fair because not all banks are the same – the denigration of bankers is just not helpful."
Mr Dimon complained that the fury directed at the banks had made it very difficult for JPMorgan and others to raise legitimate objections to some of the reforms pursued by policymakers after the crisis. "We did not fight financial reform, we fought the parts of the reform we thought were not rational," he addedd. "To say you should bend down and accept it because you're a banker is just not fair."
American banks, like their British counterparts, have faced huge criticism over their seeming unwillingness to lend more to business and individuals, which critics say has held back the economic recovery. Mr Dimon argued that only one-third of credit in the US came from banks, and that companies were now being more cautious about borrowing.
He acknowledged, however, that there was still work to do on reforming the system. He said it should be possible to structure even a bank as large as JPMorgan in such a way that its failure would not seriously damage the financial systems. "We need to be able to take [failing banks] down, wipe them out and make the unsecured creditors pay," he said.
Trichet calls for penalties for euro transgressors
Leading European policymakers yesterday insisted the single currency could continue, but warned that members of the eurozone would in future have to agree to much stricter rules on spending, taxation and borrowing.
Jean-Claude Trichet, the governor of the European Central Bank, told the World Economic Forum that the single currency had delivered its original aim of price stability, with inflation in the bloc averaging 1.97 per cent over the past 12 years.
But he urged members of the zone to return to the commitments they made when they first joined, saying: "The fundamental consideration is that when you have a single currency you have to also have a very strong economic union with quasi-automatic sanctions."
Such sanctions were dropped in the aftermath of the credit crisis but many in Europe are calling for new, tougher penalties for countries that exceed debt caps. George Papandreou, the Greek Prime Minister, said his country had made substantial progress in cutting its deficit.
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