PARIS — The leaders of Germany and France are discussing Tuesday how to get the eurozone's 17 countries to work together to address Europe's debt crisis, a day after the European Central Bank revealed that it splashed out more money than ever trying to appease the markets.
The meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy comes after a week of turmoil in financial markets, largely blamed on Europe's sprawling government debt crisis and worries that European leaders aren't doing enough to address it.
Fears that Italy and Spain, the eurozone's third and fourth largest economies, may find it too expensive to service their debts triggered last week's intervention in the bond markets from the ECB, which has increasingly stepped in as Europe scrambles.
France and Germany, which together account for almost half of the eurozone's economic output, are taking the lead in pushing for reforms. But, speculation that the two leaders would consider proposals for the eurozone to issue jointly guaranteed government debt appear to have been dashed, with officials for both sides indicating that would not be on the agenda.
Germany has remained firm in its stance that other EU countries must exert more fiscal discipline.
The discussions will center on "measures for better agreement of financial policies," Merkel's spokesman Steffen Seibert said.
Officials for both Merkel and Sarkozy said Monday that jointly guaranteed eurobonds would not be on the agenda.
Eurobonds would be a major step toward the bloc's economic integration, and are billed by supporters as an overnight solution to the crisis. Italy, Greece, Belgium and Luxembourg are among the nations calling for eurobonds. However, Germany has been adamantly against their creation, saying the EU cannot have a one-size-fits-all policy.
Finance Minister Wolfgang Schaeuble reiterated his opposition when he told the German news magazine Der Spiegel that eurobonds were out of the question as long as the currency zone's 17 nations still run their own budget policies. Different interest rates for eurozone nations, he added, were needed to provide "incentives and the possibility of sanctions to enforce solid financial policy."
Schaeuble acknowledged that the EU must, and will, beef up its response to the crisis to assist the heavily indebted nations, but that "there won't be a collectivization of debt or unlimited assistance."
Merkel has long ruled out eurobonds, and Economy Minister Philipp Roesler joined the chorus Monday, describing jointly guaranteed debt as "the wrong way" out of the crisis.
"Eurobonds would mean that everybody shares the same interest burden which would be a punishment for (financially) sound nations," he was quoted as saying by the German news agency dapd. "We cannot want this for Germany and for all other good states."
France, itself, was caught in the crossfire last week, with investors worrying about the financial health of the country's banks in particular and whether it would be the next country after the U.S. to lose its triple-A credit rating.
With Europe still scrambling to come up with measures that appease the markets, the European Central Bank has been taking a more central role in dealing with the crisis, that has already seen Greece, Ireland and Portugal bailed out.
It revealed Monday that it spent €22 billion ($32 billion) in the bond markets. Analysts think a large chunk, if not all, of that money was spent propping up the bond prices of Italy and Spain, which had seen their borrowing costs ratchet up sharply in the preceding weeks.
Baetz reported from Berlin; AP Business Writer David McHugh also contributed from Frankfurt.