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Finance minister: eurozone not in danger

The Local · 30 Dec 2011, 16:15

Published: 30 Dec 2011 16:15 GMT+01:00

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In an interview with the Handelsblatt newspaper, Schäuble said the continent’s leaders were “doing everything possible to prevent a falling apart” of the single currency.

“I think we will be far enough along in the next 12 months that we will have banished the dangers of contagion and will have stabilised the eurozone,” he told the newspaper.

Schäuble’s positive words come amid increasing concern about the future of Europe and its common currency. Some have questioned whether the continent’s leaders really have the will to institute painful financial reforms deemed necessary in 2012 to maintain economic stability.

Germany, which has had a relatively successful economy compared to its struggling neighbours like Greece, Italy or Spain, has been a voice of fiscal caution over the past months.

It has rejected calls to make the European Central Bank a lender of last resort for countries in crisis, fearing printing new money to purchase government bonds could lead to massive, unsustainable inflation. Instead, it has insisted that financially troubled countries have to institute serious austerity measures.

Schäuble himself has spoken out strongly against the creation of eurobonds, a scheme to pool countries’ bonds, which he said would violate European treaties.

In his Handelsblatt interview, Schäuble said refinancing European governments’ debt next year would prove to be a painful – but possible necessity.

“If necessary, a somewhat higher interest rate has to be paid for some government bonds,” Schäuble said.

But he said that might not damage economies. It could, in fact, “encourage the understanding that we have to attack the actual causes of the crisis: debts that are too high and a lack of competitiveness," he told Handelsblatt.

Schäuble’s comments may be calculated to counter recent gloominess about the eurozone’s future in some quarters, which has led to unease in financial markets.

Story continues below…

In an interview with the populist Bild newspaper earlier this week, one of Chancellor Angela Merkel’s advisors warned that such a euro-zone breakup “could not be completely excluded.”

The Local/mdm

The Local (news@thelocal.de)

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Your comments about this article

21:10 December 30, 2011 by Landmine
The eurozone may not be in danger, but by the looks of it German Finance Minister Wolfgang Schäuble teeth may well be....

Fashion tip, how about some toothpaste with whitener?
23:43 December 30, 2011 by Englishted
Another example of the idea that if you say something often enough it must be true.

German's inflation rate for 2011 was over what the E.C.B. demand but that little problem can be forgotten as everything in the Euro garden is coming up smelling of roses because of all the manure we are forced to hear.
15:08 December 31, 2011 by raandy
Easy to say when your not the country undergoing dire austerity measures, selling bonds and borrowing money to service debts you can not pay. The growth of the EU was downgraded from 1.8 to .05.

Keep smiling not everyone can.
00:58 January 1, 2012 by jmclewis
All is well the Northern Europeans will finance the Southerners..... so they can retire.
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