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"We are clearly seeing additional tension and acute stress applying to both banks and sovereigns in the euro area," Christine Lagarde said at a meeting of finance ministers late Thursday. Monti is positioning himself as a mediator between Germany's Chancellor Angela Merkel, who insists that countries need to maintain tight fiscal discipline to recover, and recently elected Hollande, who argues that measures to encourage growth should be used alongside austerity measures. Merkel's government has agreed to press for the introduction of a financial transaction tax among at least nine countries in Europe
-- a pledge that Germany's opposition extracted in exchange for its support in a parliamentary vote next week on her cherished budget-discipline pact. It also has agreed to support investments to foster economic growth -- but those growth-promoting measures fall short of traditional stimulus spending, and Germany remains adamant that Europe can't finance growth by running up new debts or jointly issuing debt in the form of so-called "Eurobonds" to alleviate pressure on struggling countries. Merkel's center-right government also has blocked opposition calls to accept a so-called European debt redemption fund, sticking to its vehement resistance to any form of pooling debt among eurozone countries. Meanwhile Monti, for example, is not in favor of the tax; he may go along for concessions in other areas, the government source in Rome said. The meeting was moved up by a few hours to give Merkel time to fly to Poland to watch Germany play Greece in a European Championship quarterfinal match. The game pits Europe's strongest economy, Germany, against the Eurozone's most troubled, Greece. The just-installed Greek leader had no immediate plans to attend.
[Associated
Press;
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