A more perfect European Union

Members of the European currency union spelled out plans for deeper financial and fiscal integration on Tuesday, in an attempt to inspire confidence among the world's 20 largest economies during the final day of their summit in Los Cabos, Mexico.

The European members of the Group of 20 (G20) sketched out plans to integrate the 17-member eurozone's banking sector, in the hopes of breaking a cycle in which highly indebted countries such as Spain bailout their ailing banking sectors, thereby burying their governments deeper in debt.

"I will propose building blocks for deepening our economic and monetary union so that we can show the rest of the world and to the markets that the euro and the eurozone is an irreversible project and that we want to deepen it and to give it a strong policy infrastructure," EU Council President Herman Van Rompuy said in a video message posted online.

'Integrated financial architecture'

Much of the rest of the G20 has pushed Europe to lay out a clear timetable and roadmap for expanding its financial, fiscal and political union. European leaders are expected to lay out their specific plans during the European Union's upcoming summit from June 28-29.

"We support the intention to consider concrete steps towards a more integrated financial architecture, encompassing banking supervision, resolution and recapitalization, and deposit insurance," the G20 said in its joint release.

French President Francois Hollande said that he and German Chancellor Angela Merkel understood that only Europe could solve its economic problems. France and Germany are considered the key actors in any solution.

"Mrs. Merkel and I know that Europe must have its own response," Hollande said on the sidelines of the G20 summit. "It must not be given to us from the outside."

'Pan-European recovery plan'

International Monetary Fund (IMF) chief Christine Lagarde said that Europe's leaders had demonstrated their readiness to do whatever was necessary to shore up the stability of their currency union. The IMF has played a key role in the European debt crisis, contributing funds to the bailouts of Greece, Ireland and Portugal.

"We all are concerned about Europe, particularly the eurozone," Lagarde said. "In Los Cabos the seeds of a pan-European recovery plan were planted."

"European leaders committed to take all measures necessary to safeguard the integrity and stability of the euro area and break the feedback loop between sovereigns and banks," the IMF chief added. 

US President Barack Obama signaled his confidence that Europe was prepared to take ambitious action, even if the continent's political institutions often worked slowly to implement crisis measures.

"They understand the stakes, they understand why it is important for them to take bold and decisive action and I am confident they can meet those tests," Obama told a press conference at the end of the summit.

"They have to work through all the politics to get it done and markets are a lot more impatient," the president said.

slk/jm (Reuters, AFP)