France will go it alone if it can not convince its European partners to quickly impose a new tax on financial transactions, President Nicolas Sarkozy said today.
The French leader spoke in Paris after talks with Italian Prime Minister Mario Monti. Earlier, both Italy and Germany had publicly urged EU members to agree a joint tax rather than impose one unilaterally.
Meanwhile, Sarkozy is to travel to Italy with German Chancellor Angela Merkel on January 20.
Speaking to journalists alongside Monti, Sarkozy said Paris and Rome "have exactly the same view on Europe's future and on how to resolve the confidence crisis at the heart of the euro zone."
A meeting between the leaders of the three countries would bring together the crisis-hit euro zone's three largest economies as Italy and France fight to head off new doubts about their deficit reduction plans.
Record level of deposits placed with ECB overnight
Nervous European banks parked €455 billion with the European Central Bank overnight - a new record - preferring to earn low interest rather than take the risk of lending to each other.
After a brief respite from bad headlines over the New Year holiday period, the euro zone debt crisis has resurfaced with a vengeance, driving the euro to a new 16-month low.
The euro fell as upbeat US payrolls data contrasted sharply with dire economic numbers in the crisis-hit euro zone. The euro dived to $1.2698 earlier today, which was last seen on September 13, 2010. It later recovered to stand at €1.2719 this evening.
It also sank to 97.91 yen, which was the lowest level since December 2000.
France has yet to face the same borrowing costs as its southern neighbours, but its AAA debt rating is under the imminent threat of a downgrade as bond markets lose faith in EU financial reform plans.
Monti rattled markets with an unannounced visit to Brussels yesterday before moving on to Paris today. He is due to see Germany's Chancellor Angela Merkel in Berlin next week to prepare for a January 30 EU summit.
Sarkozy has embarked on an austerity drive designed to prevent France suffering from the same fate, but French banks are dangerously exposed to Italian and Spanish debt.
ECB man wants Greek bondholder plan dropped
European Central Bank policymaker Athanasios Orphanides has called for euro zone leaders to abandon plans to make private sector investors help reduce Greece's debts.
Orphanides, who is also the central bank governor of Cyprus, was writing in the Financial Times.
He said dropping plans to force losses on private sector holders of Greek debt would "help restore trust" in the euro zone and lower the borrowing costs of other governments in the currency union.
The involvement of the private sector in the Greek bail-out has eroded investor confidence in euro zone sovereign debt and raised pressure on borrowing costs, despite efforts to reassure markets that Greece is an isolated case.
"Reversing the Greek private sector involvement decision would also raise the financing costs on the Greek government, but by restoring trust in the euro zone it would reduce the financing costs of other euro zone governments," Orphanides wrote.
A 30-year low interest rate loan to Greece from other countries could accompany the reversal of private sector involvement, he said, helping to keep its financing costs in line with present fiscal plans.
An ECB spokesman declined to comment on whether Orphanides' views represented the position of the ECB as a whole.
Lagarde doesn't expect end of euro in 2012
The head of the International Monetary Fund says the euro is unlikely to "vanish" this year.
But Christine Lagarde warned that a report later this month would show the global economy growing slower than the 4% estimated in September.
"Will 2012 be the end of the euro? My answer is, I don't think so," she told a press conference during a visit to South Africa.
But she warned that the euro zone crisis was taking a toll on Africa and the rest of the world, with the IMF set to release a report around January 25 that is likely lower the global growth forecast.
"It should be revised downwards. We will come out with figures around January 25, 26," she said.
"We should be prepared for a 2012 that will not be an easy journey, but one of effort and focus (regarding) the European crisis and its resolution," Lagarde said.
Lagarde is set to meet with South African President Jacob Zuma tomorrow in the central city of Bloemfontein, where he is taking part in weekend celebration to mark the 100th anniversary of his ruling African National Congress.
South Africa fell into its first recession since the fall of apartheid during the 2008 global financial crisis.
While the recession lasted only nine months, the country has struggled to boost its growth rate to levels that the government says are needed to make a dent in a 25% unemployment rate that keeps 38% of the population living in poverty.
The rest of Africa escaped the fallout from the 2008 crisis, with many countries posting strong growth on the back of increased trade and investment with Asia, particularly giants China and India.
But Europe remains a critical trade partner for the continent, which is keeping a wary eye on the potential fallout of the euro zone crisis.
