ECONOMY

EU considers plan for more memorandums

The European Union is considering whether it could encourage countries to make long-term economic changes by offering them loans at below-market rates, an EU official told reporters in Brussels on Monday.

The idea is to spur reform in areas like labor policy, vocational training or the judicial system, the official said on condition of anonymity because the proposal is still in early planning stages.

The loans could be most attractive to smaller countries that do not have reliable market access, while bigger nations might benefit from looser budget targets in exchange for reform commitments.

National diplomats will get their first look at the plan next week during a preparatory meeting for an EU leaders’ summit in December.

At the summit, heads of government aim to settle on a framework for designing so-called contractual agreements that would supplement existing EU budget rules.

The sovereign debt crisis in the eurozone that began in Greece in late 2009 prompted EU leaders to back unprecedented levels of economic and regulatory coordination.

The 17-nation currency bloc has agreed to new budget rules, put the European Central Bank in charge of bank supervision and pledged to create a common system for managing struggling banks.

[Bloomberg]