19 OCT 2010
EUOBSERVER / BRUSSELS - Eurozone finance chiefs have backed new rules for stricter fiscal discipline, including automatic penalties. Meanwhile, France and Germany have spoken out in favour of a permanent bail-out fund that would require a change to the EU treaties.
Under the previous set-up, eurozone governments which flouted rules limiting the size of their public deficit could only be sanctioned following a majority decision by their peers. As a result, scofflaws regularly got away without punishment.
The new "reverse majority" system agreed in Brussels on Monday (18 October) flips the framework on its head, with penalties automatically applied unless a majority of states oppose the move.
Governments will be given a six-month period of grace in order to fix their excesses in a softening clause pushed through by France.
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