Europe took a major step toward resolving some of its debt woes late Thursday and into early Friday. According to The New York Times, the European Union has agreed to change its treaty to require a greater degree of fiscal responsibility from member nations.
The new treaty requires countries in the European Union to limit their deficits to no more than 0.5 percent of their gross domestic product, though that rule can be bent under certain circumstances. It will also impose penalties for those who break that rule and require a greater degree of information sharing.
The treaty did not garner full support of all member nations, with the U.K. and Hungary refusing to support the treaty, though all members of the euro zone voted in favor and it also received a welcome boost from Mario Draghi, the head of the European Central Bank.
‘It is a very good outcome for euro area members and it’s going to be the basis for a good fiscal compact and more disciplined economic policy in euro area countries,” Draghi said, according to The Times.
That same morning, however, The New York Times notes that Moody’s Investors Service also downgraded the credit ratings of three of the largest banks in France – Société Générale, BNP Paribas and Crédit Agricole – illustrating the still growing impact of the debt crisis.