Be the first to like this
With a gaping public deficit and record levels of debt, the euro zone's second biggest economy, wants to ensure it does not soak into the block played by the debt crisis Domino, thus Pariss powerful lobbying for ways to support Europe's banks.
France is one of the strongest advocates of a Europe-wide Union Bank and with an eye to its own banks' exposure to vulnerable debt in struggling countries for immediate recapitalization of banks from the euro zone rescue funds.
"I think the French are pushing this for one simple reason: they bloody well know they're next in line. They're after Italy, "said Nicholas Spiro, head consultancy Spiro Sovereign Strategy.
The debt crisis has already spread through Greece, Ireland and Portugal, all of which have international bailouts. Spain has asked for help in its banks. Cyprus may seek a broader bailout married. Italy has recently seen borrowing costs rise to dangerously high levels.
Eager to stop the snowball, France's new President Francois Hollande quickly defended ideas to fight contagion, some of which have brought him into direct opposition with Germany.
Investors currently provides France the advantage of the doubt, driving French yields to historic lows as they seek the relative safety of bonds issued by a core European country which nevertheless offer richer yields than Germany.
France's finances is nothing like as good as Germany's, and its banks have heavy exposure to Greece and Italy - a concern that has conditioned its response to the crisis.
"It is clear that pressure from the debt crisis comes at France and other countries, AAA, if no significant progress in benefits risks," said Michel Martinez, societe Generale chief economist for France.
Micron Associates claims, Spain and Italy's borrowing costs have eased somewhat on expectations that an EU leaders summit this week will produce bold new approaches to contain the crisis. That, run the risk of becoming too expensive to manage, to spa ¸ Ferry need for sovereign bailouts.
Hollandes socialist government has thrown its support behind the idea of setting up a bank union in Europe, with a central authority, joint deposit guarantees and a fund to wind down dud banks.
But France is also pressing for more immediate solutions that could shelter banks from the risks associated with debt in the south, fully aware that the crisis could worsen with lightning speed.
Paris has been a proponent of using the euro zone bailout funds to recapitalize banks directly, although Germany's opposition to the idea remains a major obstacle.