France and Germany in new DESPERATE plot to save Eurozone amid German stocks MELTDOWN
The eurozone should have an ever closer financial union, according to two top bankers
Germany's top stock market the DAX has plunged by more than three per cent today, after last week closing at its lowest level since October 2014.
The country's biggest banks are among the worst hit, with Deutsche Bank's share price diving by more than 10 per cent, and Commerzbank down by more than nine per cent.
Now top central bankers from Germany and France have called for even closer integration of eurozone economies in a bid to ward off the collapse of the European Monetary Union (EMU) and called forthe formation of a Eurozone treasury.
More of the bloc's financial policies should be dictated by Brussels, according to France's newly-appointed Francois Villeroy de Galhau and Germany's Jens Weidmann.
They wrote: "While monetary policy has delivered a lot of support for the euro-area economy, it cannot bring about long-lasting economic growth. More integration appears to be the most straightforward solution to restore confidence in the euro area."
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Europe's top central bankers are worried about the future of the euro
The bankers today said the survival of the single currency relies on the 19 member countries more closely integrating their economies and letting more decisions be made at a European level.
This would stop financial trouble from one country from infecting others, and fix inherent flaws in the euro currency, in the opinion of the Mr Villeroy de Galhau and Mr Weidman.
The pair tabled the idea of a European finance ministry and fiscal council to undertake more of the decisions that are made on a country-by-country basis.
And the policymakers urged more cross-border shareholding in companies, which they said would spread the burden of downturns, with losses from a troubled company then shared by investors in different countries.
In a joint editorial, the two bankers also called for a further-reaching system of Europe-wide banking regulation and oversight.
The plan could encourage investors to shift money out of savings and toward productive use in the economy, Mr Weidmann and Mr Villeroy de Galhau wrote.
Francois Hollande recently declared France is in a state of economic emergency
Alongside Germany, the eurozone's second largest economy France looks increasingly dismal.
President Francois Hollande declared a state of economic emergency in January amid continued low growth and high unemployment.
Overall, it's predicted eurozone growth is to come in at just 0.3 per cent for the final three months of 2015 in data later this week.
Meanwhile in Greece, the stock exchange hit a 25-year low, closing nearly eight percent lower.
Bank shares lost almost a quarter of their market value amid concerns over the future of government reforms.
The downturn came amid a general European stock market slump as investors cashed out of banking shares following recent poor earnings, with worries over China's economy and falling oil prices also weighing on sentiment.
The European Central Bank is next month set to inject billions of pounds worth of cash into the Europe's economy in an effort to kick-start growth and ease investor worries.
Michael Hewson, chief market analyst at CMC Markets UK, said: "It appears that softening economic data and disappointing earnings reports is contributing to a negative feedback loop and worries about the financial health of European banks aren’t helping.
He added: "The questions of non-performing loans as well as shrinking margins are creating an increasingly difficult environment for European lenders and it would appear that investors are slowly waking up to the reality that negative rates aren’t likely to help the profitability of a sector that is still dealing with the legacy of the sovereign debt crisis."