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Fitch expects slow progress in eurozone reforms

A difficult path lies ahead for proposals to overhaul the economic and monetary framework of the eurozone as member states remain divided on the direction of reforms, Fitch Ratings said in a new report.

Fitch said addressing the structural weaknesses of the Economic and Monetary Union, or EMU, could boost the ratings of lower-rated sovereigns. However, it was only expecting "slow and incremental progress" on the reforms due to disagreements among eurozone countries.

The rating agency noted that some member states, including France, favor greater risk-sharing at the EMU level, such as deepening the banking union and strengthening the European Stability Mechanism, or ESM. Others, like Germany, focus more on country-level risk reduction.

An agreement to beef up the banking union seems feasible, Fitch said, while improving the ESM could benefit sovereign ratings.

Last week, European Central Bank President Mario Draghi voiced support for deepening the eurozone's banking union and for the creation of a new fiscal instrument to help absorb large shocks.

EU policymakers are expected to decide on the reforms at a summit in June.