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Sarkozy, Merkel Publish Proposal To Save Common Currency

French President Nicolas Sarkozy (right) welcomes German Chancellor Angela Merkel prior to a working lunch at the Elysee Palace in Paris on December 5.
German Chancellor Angela Merkel and French President Nicolas Sarkozy have sent a letter outlining their proposals to save the euro currency.

The letter, which was sent to European Council President Herman Van Rompuy, sums up proposals outlined by the two leaders on December 5.

It says governments that allow their deficits to exceed 3 percent of their GDP should be automatically sanctioned and asked to come up with a plan for reducing spending.

It adds that governments that continue to violate spending rules will face a series of increasingly strict sanctions.

At a summit on December 9, EU leaders will discuss France and Germany's proposals to impose greater budget discipline on the 17 countries using the euro as a common currency.

Meanwhile, U.S. Treasury Secretary Timothy Geithner said in Paris he was very encouraged with the progress Europeans are making in coming up with a plan to shore up the euro.

compiled from agency reports