G7 members are holding a conference call today to discuss solutions for the mounting economic crisis in Europe, with German the likely key. The emergency huddle of the finance chiefs of the US, UK, German, Italy, France, Japan, and Canada underscores a mounting panic about the crushing debt of the European Union. Greece, Ireland, and Portugal are all operating under international bailout programs, and officials fear a bank run in Spain, fallout from Greece's upcoming election, and an increasingly dire global impact. Germany appears willing to pool EU debt, but only if member nations agree to stricter controls and some kind of central supervision of government spending, reports the New York Times. Finding the way to “more Europe, not less” is the task for Europe's leaders now, German Chancellor Angela Merkel said yesterday.
One likely scenario is a plan to combine much of Europe’s bad debt into a single fund with an aim to pay it off over 25 years. Accompanying that would be an expansion of executive power in Brussels over member nations' fiscal targets, as well as supervision of banks, and Europe-wide deposit insurance, notes the Times. "We will discuss to what extent we need to put systemically relevant banks under a specific European supervisory authority so that national interests do not play such a large role," Merkel said yesterday. The plan faces stiff resistance from the powerful German banks, which argue that European-wide deposit insurance would mean using German savings to prop up weak banks beyond their borders, and weaken German institutions in turn, notes the Wall Street Journal. Asian stocks rallied early today on hopes that the G7 nations would take some kind of action, reports Reuters.