CRISIS FIX

European Central Bank Gears Up

This sounds like a challenge. A day after global banks pledged to boost the financial system by providing cheaper funds for European banks, European Central Bank President Mario Draghi hinted at a “new fiscal compact”: if government leaders deal with structural flaws that let nations like Greece spiral financially and risk taking the global economy with it, the bank could bolster its support for the economy. This intervention in bond markets—no actual details were revealed—would avoid undercutting Germany, a nation that opposes ECB bailouts of Greece and Italy, and would not be awarding nations that have failed financially. The ECB will not buy securities as the Federal Reserve did. Meanwhile, French President Nicolas Sarkozy called for more budget discipline. He is scheduled to meet with German Chancellor Angela Merkel before the EU summit.