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Schäuble dismisses bailout increase talk

The Local · 26 Nov 2010, 12:19

Published: 26 Nov 2010 12:19 GMT+01:00

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"No, we have an instrument to deal with crises in the eurozone and we are working intensively on Ireland, which has made a request" to receive help from the rescue fund, Schäuble said on Bayerische Rundfunk radio.

"I hope that by the start of next week we have the necessary decisions in Europe so that we can have calm on the markets again so that we can put an end to this completely over-the-top speculation."

Late on Wednesday, the powerful head of the Bundesbank German central bank, Axel Weber, said European countries would not allow a speculative attack on the euro and would increase the fund if necessary.

"If that amount is not enough, we could increase it," Weber said.

His remark prompted a flurry of commentary. But Schäuble said: "At the moment we have a rather nervous situation because there is an incredible amount of speculation, with completely obscure comments suddenly taking on a meaning and unsettling markets."

In May, in the wake of a crisis over Greece, the European Union and the International Monetary Fund cobbled together a €750 billion rescue fund for other eurozone countries in need.

With speculation that other countries such as Portugal and Spain might need aid, reports said this week that the EU was considering doubling its €440 billion share of the fund to €880 billion.

Both the head of the fund, Klaus Regling, and the European Commission have ruled out an increase, saying it is adequate to cope with current problems.

Also on Friday, Germany denied reports it was putting pressure on Portugal to seek aid from the bailout fund, as fears of contagion from the Irish debt rescue spread throughout Europe.

"This is not at all the position of the ministry," a finance ministry spokesman told news agency AFP.

The Financial Times Deutschland reported earlier, without citing sources, that the European Central Bank and other eurozone countries were pressing Lisbon to accept aid.

The Portuguese prime minister's office also dismissed the report, saying it was "totally false."

If Portugal were to tap the fund, it would help Spain, also seen as a potential bailout case, the newspaper reported.

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"If Portugal were to use the fund, it would be good for Spain because the country has high exposure in Portugal," the FTD quoted a German finance ministry source as saying.

Although Lisbon has denied it needs help, the markets are eyeing the debt-stricken southern European state as its next target after Ireland, said Thomas Mayer, chief economist at Deutsche Bank.

"I fear that the markets are looking at Portugal, which has similar fundamentals to Greece," the analyst told the Frankfurter Allgemeine Zeitung.


The Local (news@thelocal.de)

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Your comments about this article

14:39 November 26, 2010 by Aschaffenburgboy
This is so ridiculous. Germany is the one speculating and creating rumors to try and fight the devaluation of the dollar that began when the FED made the decision to inject another 600 billion greens into the economy. Now Germany wants to bring the EURO down not to miss out on exports. Germany is creating this "crisis" right now and spreading rumors themselves. When the Euro is around 1.25 to the dollar they will wave a magic wand and everything will be good again. You will see.
15:21 November 26, 2010 by MonkeyMania
You may well have a point there. It was Germany who were putting the most pressure on Ireland to accept a bailout even though they didn't want one. Ireland would have been better off without the Euro whereas they could have tackled their debt crisis in much the same way as Island did. It appears the Euro is a tool developed to benefit German industry mainly. Whilst I love the idea of the Euro, I feel Germany is using it to other smaller countries detriment. One thing for sure, Germany is not financing the Euro for the good of it's health.
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