Angela Merkel is wrong, say 172 economists The economists, who included Hans-Werner Sinn, head of Ifo, the influential think tank, argued that the German chancellor had taken a dangerous step towards a "banking union." The agreement by leaders at the last summit to allow the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) to fund struggling banks directly - rather than via governments - was seen as a key advance. Spanish banks, which have dragged the eurozone's fourth -biggest economy to the brink, are expected to tap the bail-out funds for as much as €100bn. But in the letter, published by the German daily, Frankfurter Allgemeine Zeitung, the economists said: "Banks' debts are nearly three times higher than government debts . . . the taxpayers, retirees and savers in the so-far solid countries of Europe must not be made liable for backing these debts, particularly since gigantic losses are foreseeable from financing the southern countries' inflationary economic bubbles." They added that they viewed the "step toward a banking union, which means collective liability for the debts of the banks of the eurosystem, with great concern." Mrs Merkel dismissed the economists' concerns. "First of all, this is about better banking supervision, and one can only say that that is urgently necessary," she told reporters. This is absolutely not about any additional liability.