Eurozone leaders push for "fiscal union"

The leaders of the eurozone’s three largest economies, Germany, France and Italy, jointly called on Thursday for a "fiscal union" to be enshrined in a treaty, the Financial Times reports. The measure would drive economic integration and serve to enforce greater budgetary discipline, said German chancellor Angela Merkel, French President Nicolas Sarkozy and newly appointed Italian Prime Minister Mario Monti, who’s been eagerly welcomed by eurozone leaders, unlike his predecessor Silvio Berlusconi. Creating a fiscal union may be what’s needed for Merkel to warm up to the idea of commonly backed eurobonds, a proposal which some say is the best option to stave off a possible collapse for the euro. Talk of fiscal unity, however, failed to calm the markets, which pushed yields on Italy’s short-term bonds to euro-era highs on Friday, and even higher than long-term bonds, meaning investors are pricing in the risk that Italy could soon default.

The Financial Times

The Financial Times