By Luke Baker
BRUSSELS, May 19 (Reuters) – Just when the European Union was beginning to show signs of unity in tackling its debt crisis, Germany may well have thrown a spanner in the works.
Berlin’s decision late on Tuesday to ban several financial transactions — a move designed to quell volatility — not only took the markets by surprise but most of its euro zone partners too, and has led to more uncertainty, not less.
The ramifications for the euro zone and its 11-year-old currency could be profound. Not only does the move undermine efforts to improve coordination and political unity across the European Union, but it has sent the euro to a new four-year low.
“This sends a very unfortunate message,” said Simon Tilford, chief economist at the Centre for European Reform, a London-based think-tank.
“It again suggests that the Germans are no closer to understanding that the markets are not the problem here. The markets are right to be uncertain about the sustainability of the euro zone in its current form.”