Francois Hollande and Angela Merkel

French President Francois Hollande may fail in his attempts to talk German Chancellor Angela Merkel into providing more financing guarantees to stabilize the eurozone.

In the European Union summit, to be held on June 28-29, Hollande is expected to insist on a bank deposit guarantee scheme, growth revival and common euro bonds.

He is also backing a push by Italy to let the bloc’s bailout fund buy troubled states’ sovereign bonds on the secondary market. The goal of the initiative is to fight speculation and curb indebted states’ borrowing costs.

However, German Chancellor refuses to consider such steps before euro states sign up to much deeper fiscal integration. Merkel is not set to consider any compromise either – she refuses to mull over the possibility to introduce short-term “euro bills”.

This serves as a blunt reminder that as long as Germany “holds the cheque book Berlin calls the shots,” reports Reuters.

Failure to bend Merkel’s firm stance can potentially damage Hollande’s image at home. Yet it can also shake financial markets which are looking for firm action to underpin the euro.

“There is a real conflict here and the future of Europe is at stake. Hollande has exerted the maximum pressure on Merkel but if she remains intransigent and only agrees to the growth pact, I believe he will cave in and give her what she wants. He is not the type to get into an arm wrestle or serious clash over this,” says a French economist who asked not to be named.

Meanwhile, it has emerged that Hollande has invited Merkel to Paris for a working dinner.

“We will be working with our German partners on a compromise up until the very last minute,” French sources say.

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