EU ministers look to strengthen euro on foreign exchange markets

Finance ministers in Europe have reached new agreements to help strengthen the euro and prevent another debt crisis.

They will implement tougher penalties for EU member states that fail to comply with the 27-member bloc's fiscal rules.

EU president Herman Van Rompuy said that in addition to stricter budgetary discipline, countries will also work more collaboratively on economic governance.

This will ensure that a more co-ordinated response can be launched in the event of a future debt crisis similar to that in Greece.

The announcement comes after the euro fell to a four-year low against the dollar last week, driven by concerns over debt levels in some other EU nations.

As part of the plans, an economic management mechanism will be set up to help countries that are struggling with arrears.

Mr Van Rompuy told the BBC: "In the past, corrective measures were taken too late, the available legal instruments were not used sufficiently.

"That's why we need to act in a number of ways."

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Posted by Thomas Smith