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France, Germany Propose 'True Eurozone Governance,' Fiscal Discipline

German Chancellor Angela Merkel (left) and French President Nicolas Sarkozy during their meetng at the Elysee Palace in Paris on August 16
French President Nicolas Sarkozy says France and Germany have agreed to present proposals in September for a tax on financial transactions and push for closer joint governance of economic policy.

Speaking at a press conference in Paris with visiting German Chancellor Angela Merkel, Sarkozy said their two countries will propose a eurozone governance body -- including a president with a 2 1/2-year fixed term -- to restore market confidence amid Europe's on-going debt crisis.

Sarkozy says the new body would consist of the heads of state and government of all eurozone nations and should meet twice a year.

He suggested its first leader should be the current EU President, Herman Van Rompuy.

"We also propose that the 17 members of the eurozone adopt a golden rule before or during the summer of 2012 that would include prescribing in the constitutions of all of the 17 member states that their financial regulations must be in line with the goal of returning to balanced budgets," Sarkozy added.

They said all eurozone member countries should adopt constitutional provisions on balancing their budgets.

Sarkozy and Merkel presented their proposals after meeting today in Paris amid signs of economic slowdown and after an exceptionally turbulent week on financial markets. The market volatility comes amid growing concerns about Europe's financial health.

compiled from agency reports