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EU ministers sign off on tougher budget rules after year-long dispute
WROCLAW, Poland (AP) ' Poland's finance minister says that after a yearlong dispute his European Union counterparts have signed off on tougher budget rules that punish overspending governments.
Jacek Rostowski said Friday that the 27 ministers approved a compromise that Polish officials had worked out with the European Parliament earlier this week.
Under the new rules, it will be easier to put sanctions on governments that breach the EU's limits on debts and deficits. Governments who ignore warnings that they risk breaking debt rules can also be punished.
Rampant overspending has come into focus during the eurozone debt crisis, which has already pushed three states into multibillion euro bailouts.
The parliament succeeded in centralizing the sanctions rules that states had tried to water down.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WROCLAW, Poland (AP) ' U.S. Treasury Chief Timothy Geithner suggested his European counterparts give their bailout fund more firing power by allowing it to draw on money from the European Central Bank, Ireland's finance minister said Friday.
Geithner addressed a meeting of eurozone finance ministers in Wroclaw, Poland, amid growing concerns that Europe's crippling debt crisis is hitting the U.S. and global economies.
The U.S. Treasury Chief "talked about a system of the EFSF fund leveraging additional resources in combination with the European Central Bank," said Michael Noonan, adding that he was keen to learn more about the scheme.
Leveraging the euro440 billion ($605 billion) European Financial Stability Facility could mean using eurozone states' guarantees for the fund to also back loans from the ECB, which would give the eurozone more crisis money without further commitments from governments.
However, a European official said there was opposition to such a scheme from Germany, the largest eurozone economy. The official was speaking on condition of anonymity because of the sensitivity of the discussions.
Germany has traditionally been skeptical of heaving more credit risk onto the ECB and has seen itself as a defender of the bank's independence from political quarrels.
Geithner's suggestion comes after the president of the European Commission, the EU's executive, as well as other high-raking European officials have called for a significant expansion of the EFSF.
In a summit in July, eurozone leaders equipped the fund with several new powers, such as giving pre-emptive credit lines to struggling countries and buying government bonds to support their prices during a market selloff. But economists say that, at its current size, the fund, which is already being depleted by rescue loans to Ireland, Portugal and an agreed second bailout for Greece, cannot effectively use the new tools.