France has denied reports that it had drafted a plan to inject up to €15 billion into its major banks amid fears over their heavy exposure to Greek debt, the Irish Times reported. The Journal du Dimanche yesterday reported that the state offered a €10-15 billion bank recapitalisation at a meeting earlier this month with senior officials from five institutions: BNP Paribas, Société Générale, Crédit Agricole, Banque Populaire-Caisse d’Épargne and Crédit Mutuel.

French president Nicolas Sarkozy has given the green light for a highly political budget, placing the burden of new revenue raising on the richest and on big companies while preserving the benefits of some tax breaks for ordinary workers, the Financial Times reported. Just nine months away from a presidential election, France’s high earners will face higher taxes as the government seeks some €12bn in extra revenue by the end of next year to help bring public finances under control.

Some of France’s wealthiest individuals, including the L’Oréal heiress Liliane Bettencourt, have called for a tax on the rich in a gesture of national solidarity as the government prepares to announce swingeing cuts to bring public finances under control, the Financial Times reported. The proposal follows a similar demand in the US from billionaire investor Warren Buffett, who earlier this month criticised the fact that his tax rate was lower than many of those who worked for him.

For the second time in as many weeks, President Nicolas Sarkozy flew to Paris for the day from his holiday spot on France’s Mediterranean coast to try to calm the markets, The Economist reported. His meeting with the German chancellor, Angela Merkel, at the Elysée Palace on August 16th took place as the panic of recent weeks had given way to mere gloom about the stagnating euro-zone economy.

France and Germany on Wednesday increased the pressure on their euro-zone peers to improve fiscal discipline in the bloc with a proposal to cut off the region's wayward spenders from key European Union transfer funds, The Wall Street Journal reported. The proposal marks an effort to boost fiscal discipline across the euro zone by giving countries incentives to rein in spending and cut their budget gaps. But the idea is controversial and could be difficult to enforce, as well as to sell to the rest of the bloc.

France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but they failed to convince other regulators to go along with a European Union-wide prohibition, the Financial Times reported. The bans on the controversial practice where investors aim to profit from price falls will take effect on Friday morning. But other main markets, including the US and the UK, have said they have no plans to follow suit.

With the sense of economic crisis deepening in Europe after the United States debt downgrade, investors have played Who’s Next with the shrinking list of nations that still hold the top rating of AAA. And their sights have landed on France, the International Herald Tribune reported. The head of the French central bank, Christian Noyer, leaves the Élysée Palace in Paris after a meeting with the heads of major French banks and President Nicolas Sarkozy.

France and Britain are most vulnerable within Europe to a rating review following the U.S. downgrade, with anaemic growth and hefty borrowing placing them among the shakiest of the world's triple-A rated lenders, Reuters reported in an analysis. Both countries have stable rating outlooks, making a sudden downgrade unlikely and markets have been so impressed by Britain's debt-cutting strategy that they have pushed its bond yields to record lows. But a surge in the cost of insuring French debt against default on Monday highlighted alarm sparked by Friday's U.S.

While the financial world was watching Capitol Hill last week, offering up febrile prayers for a ceiling-smashing bill, the International Monetary Fund quietly wondered whether France could hang on to its platinum credit card, The Wall Street Journal Agenda blog reported. Last Wednesday it warned that the country would miss its 3% budget deficit target for 2013 unless it took further steps to cut spending, which were also needed to safeguard—guess what—its credit rating.

It is too early to say what will finally emerge as a deal between European financial groups and governments. But there is a growing consensus that the proposal circulated by the French banking sector on Monday was a credible blueprint, the Financial Times reported. “The French proposals have catalysed the debate,” said Charles Dallara, managing director of the Institute of International Finance, which represents most global banks and helped organise the Rome talks.