There is no need for markets to be concerned about the stability of the euro zone, according to Germany's finance minister.
The European Central Bank suggested it would tighten monetary policy aggressively but failed to announce any support for the more indebted nations. The yield on the Italian 10-year bond went above the 4% threshold for the first time in three years because investors were uneasy about the region.
The euro zone is stable, the monetary union has a robust character, and we are considering measures to fight inflation. Christian Lindner, Germany's finance minister, said that there was no need for concern as the spreads were rising.
There is no need for anyone to be nervous if you compare interest rates and spreads from a long time ago. I am confident that we could overcome any situation.
An emergency meeting was called by the European Central Bank. The euro zone's central bank said it would be creating a new tool, but there is no information on what type of instrument it will be or when it will be applied. The outcome gave some relief to borrowing costs in the euro zone, but it didn't give investors the information they were looking for.
Bring your budgets in order.
The euro zone finance ministers met in Luxembourg Thursday to discuss the central bank's actions.
Austria's Finance Minister Magnus Brunner had a message for his counterparts: "Bring your budgets in order."
One of the biggest challenges for the euro zone is that there are 19 different countries with different fiscal positions and one central bank.
If all the budgets in all member states are in shape, the European Central Bank can have more possibilities.
Fiscal consolidation in the euro area is not a priority at the moment. The fiscal rules were suspended in the wake of the coronaviruses to give capitals more flexibility to spend. Higher inflation is one of the challenges brought about by the war in Ukraine. The idea is to support governments in dealing with higher costs.
Lindner said that "we all need to return to sound public finances."
He said that they have to take their responsibilities as finance ministers.
In May, the European Commission predicted a growth rate of 2.5% for the euro area over the next two years.
Other institutions are more downbeat about the economy. The growth rate is expected to be 2.5% for this year and 1.6% for next year.
The euro area is not currently experiencing a recession. EU Economics Commissioner Paolo Gentiloni admitted to CNBC that we are navigating troubled waters.
We will have to concentrate our fiscal policies, in reforms, in investments, in a prudent policy, especially for countries with a high level of debt, since this doesn't mean our view is that a recession is inevitable.
The euro zone is going to get a new member soon.
Croatia was given the go-ahead to join the euro zone in January of next year. The euro area did not expand in the last two years.
Zdravko Mari, Croatia's finance minister, told CNBC that his country has done a lot to fulfill all the criteria.
He said that the benefits are much bigger than the costs.
Croatia is the youngest member of the European Union and can bring more value to the euro zone. It's clear that deeper integration of the European Union is happening despite many challenges.
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