欧洲债务危机升级

German Chancellor Angela Merkel has met with Italian Prime Minister Mario Monti on Wednesday, praising the new Italian government for the speed of its reforms.

"The speed as well as the substance of the measures are something which I think will strengthen Italy and which will improve its economic perspectives. We have followed with great respect, how quickly these measures have been put into place."

For his part, Mario Monti admits Italy can only make progress in reducing its defecit through cheaper borrowing.

"The Italians and I hope there will be a reduction of interest rates in the financial markets before we can even see major changes and progress in Italy. The high interest rates we set at a time where the markets did not trust Italy and the Italian policy. Right now the situation has changed and the rates are inappropriate. "

Italy still faces 10-year borrowing costs of around 7 percent, which is widely viewed as unsustainable.

Meanwhile, the Italian PM is also standing in support of the financial transaction tax being proposed by French President Nicolas Sarkozy.

But Mario Monti also says he would prefer to see it applied across the full 27-nation EU.

"It would be ideal if we could implement a financial transaction tax globally. But right now I think it makes sense to do it in the 27 European member countries. I doubt that it makes sense to do it in the entire eurozone."

Meanwhile, Angela Merkel has also gone on record as saying the euro zone's top priority right now is to secure a second aid package for Greece.

"The euro zone's first obligation this year is to resolve a second Greek programme and finalise these negotiations with the banks so that we can then concentrate on structural problems in the euro zone,"

Both Merkel and Sarkozy are planning to travel to Italy next week ahead of a European summit at the end of the month.
Meanwhile, finger pointing is now taking place in other parts of Europe.

EU Economic and Monetary Affairs Commissioner Olli Rehn is blasting Spain for not doing enough to bring down that country's defecit and massive unemployment rate.

"We expect that Spain will take further measures especially concerning structural reforms, not least in the labour market, because the unemployment, about 20 percent and youth unemployment above 40 percent is of course an extremely serious concern both economically and politically and humanly and therefore we can only encourage Spain to take action both in the fiscal and in the structural front."

Spanish lawmakers in the new conservative government have approved the country's first austerity measures, which include income and property tax increases.

The tax hikes coincide with almost 9-billion euros in spending cuts.

Spain has a 21.5 percent unemployment rate - by far the highest in the eurozone.

At the same time, The European Commission is also warning Hungary that it has taken "no effective action" to contain its budget deficit.

As a result, the European Commission is warning that Hungary could lose access to EU development funds.

International lenders are expected to demand tough conditions from Hungary this week in exchange for new loans.

For CRI, this is Ding Lulu.