ECB: Debt crisis reveals weaknesses of eurozone - AP

The chief of the European Central Bank said Monday that the debt crisis had revealed the weaknesses of the eurozone and that one solution would be to eventually create a central finance ministry for the continent.

Jean-Claude Trichet told a conference on the crisis in Paris that the biggest European economies had in the past ignored rules that required them to keep their deficits and debts in check. But he said the crisis had created a new consensus to strengthen and follow those rules.

That's Trichet's hope, at least. While the eurozone has been forced to bail out Greece, Ireland and Spain, it now faces a much bigger problem: There are concerns Italy could be the next country to fall. The eurozone likely does not have enough money to save its third-largest economy.

As a result, Trichet and others have been pushing Italy to make drastic cuts in its budget in order to slash its deficit. Rome has promised to do so, but Premier Silvio Berlusconi's government has backtracked on some of those cuts.
Trichet noted, as others have, that one of the hallmarks of the crisis has been that while the eurozone economies are linked by their common currency, each country creates its own budget. That will need to change, he said.

"In the future, we can imagine a confederation ... with a minister of finance with responsibilities including the regulation of the solvency of the eurozone," he said.
In the heyday of the boom, several European countries allowed their budgets to run larger deficits than the rules allowed. Countries like Greece and Portugal eventually came close to bankruptcy and were saved only by international rescue packages.

Now their debts are threatening the entire eurozone, with the large countries forced to bail them out.