France Seeks Fiscal Convergence With Germany

Written by Jessica Clark on July 19, 2010 – 6:14 pm

() - French President Nicolas Sarkozy said on Wednesday that France wants to work with Germany to achieve convergence of their tax systems.

In the weekly cabinet meeting, he called French auditors and their German counterparts to review tax systems in each country so as to make them similar. Media reports said there were no immediate response on this from the German side, although German finance minister Wolfgang Schaeuble was present at the French cabinet meeting.

It is the first time a foreign minister participated in the French cabinet meeting. Sarkozy noted that both France and Germany want to establish a credible framework to resolve the crisis.

Elsewhere, German Chancellor Angela Merkel said European banks’ stress tests are realistic. She noted that the tests are being conducted in an environment where rescue packages are in place for Greece and the currency block. Hence, she said the conditions for stress tests are realistic.

A total of 91 banks across Europe are being tested to assess whether they will be able to withstand future shocks in the financial sector. The results are due to be published on July 23. Eurogroup Chairman Jean-Claude Juncker told Austrian newspaper Kurier on July 16 banking stress tests in Europe are unlikely to reveal any major catastrophes.

According to excerpts of an interview published on French daily Le Figaro on Wednesday, French Finane Minister Christine Lagarde said she is “totally confident” about the stress test results on French banks.

Later in the day, she said both German and France jointly sent proposals to the European Union on budget discipline rules.

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