Fateful Day for Europe: Four Ideas to Save the Common Currency

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European Union leaders will be gathering in Brussels on Thursday and Friday for one of the most anticipated EU summits ever. Some say that the very survival of the common currency is at stake. But even as Germany's Angela Merkel will be focused on stricter budget rules, several other proposals are also on the table. SPIEGEL ONLINE provides an overview.

The euro needs saving. Is Europe up to the task? Zoom
REUTERS

The euro needs saving. Is Europe up to the task?

As recently as Monday, one could almost have formulated a cautious conjecture for how the European Union summit scheduled for Thursday and Friday would play out. The EU, it seemed, would agree to significant changes to the Lisbon Treaty to enshrine automatic penalties for those states in violation of euro-zone debt rules and would take steps toward greater fiscal integration in the common currency area.

In response, as hinted by European Central Bank President Mario Draghi last week, the ECB would step up its bond-buying program. Financial markets would be reassured, interest rates on sovereign bonds issued by heavily indebted European countries would fall and Europe would thus have time to implement the treaty changes and work its way out of the debt crisis.

As the summit approaches, however, that scenario is looking increasingly optimistic. Some might say naïve. Indeed, with Standard & Poor's raising the specter of a downgrade for 15 of 17 euro-zone countries along with the euro backstop fund, the European Financial Stability Facility (EFSF), the pressure is greater than ever to push through a package of measures that will deeply impress investors.

Support for Merkel

A key element of that package will be the tighter debt rules for the euro zone agreed to by Chancellor Angela Merkel and French President Nicolas Sarkozy on Monday. For weeks, Merkel has been touting such an approach as the only way the euro zone can ensure that a similar debt crisis doesn't crop up again in the future. Despite initial reluctance, it would now appear that she has the support of Paris and other euro-zone capitals.

But many are concerned that promises to increase fiscal integration won't be enough. After all, such changes could take months to implement -- too long, say many analysts, for countries like Spain and Italy, which have had significant difficulties recently in borrowing money on the bond market at reasonable prices.

Several options for additional measures have already been taken off the table. Chancellor Angela Merkel has made it abundantly clear that she is adamantly opposed to the idea of pooling euro-zone debt in the form of euro bonds. Berlin is also not a fan of massive bond buying by the ECB.

But this week, a slew of last minute proposals have emerged aimed at finally convincing the financial world that Europe can get the crisis under control. In addition, a number of older ideas have been re-floated. SPIEGEL ONLINE offers a concise overview of what will be on the agenda this week and a couple of ideas that might make the cut.

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