Eurozone leaders gather on Friday for a key economic summit, amid fears that the single European currency may collapse. Greece will dominate the agenda, but France and Germany's leaders say there is much more at stake.
The eurozone's most prominent leaders want action
German Chancellor Angela Merkel and French President Nicolas Sarkozy have called for tighter economic supervision and more conservative spending in the eurozone ahead of a key summit in Brussels.
"For economic and monetary union to remain a success story, dealing with this crisis alone will not suffice," the leaders of the eurozone's two largest economies said in a joint open statement on Thursday.
"We need to go further in drawing all the lessons and in taking all necessary measures to avoid a repetition of a crisis of this kind."
Merkel and Sarkozy suggested closer economic surveillance, and tougher sanctions on countries that fail to keep their deficits under control. They also called for tougher regulation of the financial sector, highlighting risky derivatives and hedge funds, as well as the influence credit ratings agencies can have on national economies.
Merkel failed to secure opposition support for the Greek bailout on Thursday
While the focus is on the Greek rescue package, some economists are suggesting that politicians are losing control of a spiraling debt crisis across Europe.
"The Greek financial crisis has put the very survival of the euro at stake," Nobel laureate economist Joseph Stiglitz wrote this week.
The credit ratings agency Moody's warned on Thursday that Spain, Portugal, Italy, Ireland and Britain could all end up with similar problems to those affecting Athens.
"We are in a very serious situation," Merkel told a conference in Berlin discussing the future of Europe on Thursday, adding that "tensions are becoming visible" between eurozone members with differing levels of debt.
"The significance of the euro goes beyond its function as a currency, it is a symbol for peace in the union as well," she said.
European Central Bank president Jean-Claude Trichet tried to calm the waters on Thursday, saying Greece no longer ran the risk of defaulting on its debts and that other EU countries were unlikely to end up in an equally desperate situation, despite their current problems.
'Politics against the markets'
Merkel and Sarkozy criticized the financial sector
Merkel and Sarkozy both emphasized the role of the markets and speculation in exacerbating Greece's debt problems, with Merkel using unusually strong language when addressing the level of complicity of the financial sector in the current problems.
"The banks failed, they called for rescue, they pulled the world economy into a deep hole," Merkel said in Berlin. "We got into debt to deal with that, and now the banks are speculating against these states."
"This is a struggle of politics against the markets … but I am sure that we will win this struggle."
The leaders of all 16 eurozone members meet in Brussels on Friday in a bid to finalize the Greek rescue deal, and address the longer-term future of the European single currency.
Editor: Holly Fox