A new "fiscal compact" designed to mend flaws in the single European currency's framework should be completed in the first six months of next year, European Commission president José Manuel Barroso said Wednesday.
"We are going to hopefully conclude negotiations for a new fiscal compact during the Danish presidency," Mr. Barroso told the European Parliament. "The crisis is not yet behind us, there's a lot of work ahead." Denmark takes over the European Union's six-month rotating presidency from Poland on January 1.
Germany believed that the agreement of new tougher fiscal stability rules in Europe would be enough to calm down the financial markets but not all other countries at last week's EU summit agreed, Italian Prime Minister Mario Monti said Wednesday in an address to the Italian Senate.
More systematic fiscal rigor is "essential" and the pledges made by 26 EU members last Friday will boost the credibility of public finances in the region, Mr. Monti said.
However, he made it clear he believed that more agreements would be needed, particularly on an agreement to mutualize debt liabilities, for the euro-zone sovereign-debt crisis to dissipate.
He noted that while so-called euro-zone bonds weren't mentioned in the European Council's final statement, there had been an ample discussion of such instruments and there was an agreement that they would figure on the agenda of the EU's March summit.
"The Italian government insisted heavily on euro-bonds, which are not a back-door way to allow fiscal laxity but will boost growth," Mr. Monti said. He added that jointly-guaranteed debt would deepen Europe's capital markets.
In an address peppered with complaints from the opposition, Mr. Monti added that the EU's decisions on boosting the size of so-called firewalls to prevent cross-border contagion of debt woes "fell short" of his hopes.
But they were still "substantial," he said, noting the agreement to add €200 billion ($260.74 billion) in resources through loans to the International Monetary Fund and tasking the European Central Bank with management of the European Financial Stability Facility.
He also lauded the decision to announce that private-sector creditors would no longer be required to participate in losses linked to debt restructuring.
Retreat from that stance, which was agreed by German Chancellor Angela Merkel and French President Nicolas Sarkozy at a meeting in Deauville earlier this year, sent an important signal to EU decision-makers, Mr. Monti said. "Merkel and Sarkozy made a mistake, and now they know they should hold precautionary discussions with others first."
Mr. Monti also said that he had signaled Italy's willingness to shift positions from the previous government on the proposal of a financial transactions tax and agree with France and Germany to support such a move.
"Adequate" taxation of financial transactions would allow for taxes on labor and businesses to be reduced, he said.
His address was briefly suspended amid shouting about pension reforms from the legislature from a senator representing the Northern League, the only political group in the current opposition to Mr. Monti's government, which consists of technocrats and won backing from more than 85% of lawmakers last month.
The Senate is expected next week to approve Mr. Monti's supplementary budget, which adds €20 billion in fiscal tightening to the €60 billion approved earlier in the year by the previous government. The new measures mostly consist of higher taxes although most of them represent a levy on capital rather than labor.
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