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Germany and France lead EU and will recapitalize banks in three steps. Changes in European Treaties will centralize economic policies.

Germany and France will refinance banks and solve Europe Financial Crisis Photo Credit AP

German Chancellor Angela Merkel said Sunday that Paris and Berlin were “determined to do what is necessary to recapitalize (them) to ensure the banks lending to the economy” during a joint press conference with Nicolas Sarkozy.

The french position in favor of a decisive role of the European Financial Stability Fond (EFSF) already in the start of the recapitalization process, has a partial support of the germans, due to the fact that in case of a financial crisis, the banks should first look after an agreement with private investors/lenders, if that is not possible then receive the support of its government, and if everything fails then the bank in a crisis should ask for help to the European Financial Stability Fond (EFSF).

Also Merkel wants more power for the EU to avoid new “greek” crisis. A sort of EU centralization of macro economic policies.

Chancellor Merkel assured that “the agreement was complete” between the two countries in this regard, while news reports had reported differences.

During the press conference, French President said that “Europe (should) have solved its problems by the G20″ in Cannes in early November, during a joint press conference.

The President and Chancellor, who had maintained for over an hour about the debt crisis in the euro zone before meeting the press, should continue their conversation during a working dinner.

Nicolas Sarkozy also said France and Germany would propose “significant changes” to the European treaties, adding that he was in favor of greater “integration in the euro area”. Merkel added that “the goal is to have closer cooperation and binding the countries in the euro area” to avoid budget overruns.