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Euro firm despite debt crisis
By Melissa Eddy |
November 26, 2010, Friday
|
Print Edition
Print Edition
THE head of the European Union's bailout fund says there's no chance that the debt crisis will cause the collapse of the 16-nation euro currency, even if other countries like Portugal follow Greece and Ireland in asking for a bailout.
Klaus Regling said in comments printed in Germany's Bild newspaper yesterday that while the euro could slip in value, the problems afflicting its weakest members are not putting the common currency in jeopardy.
"There's zero danger," he says. "No country will voluntarily give up the euro - for weaker countries that would be economic suicide, likewise for the stronger countries."
He says he agrees with Chancellor Angela Merkel, however, that Europe is in "a very serious situation regarding the euro."
The common currency has been hit hard in the past few weeks by the flare-up in the debt crisis, Ireland's request for financial aid and fears Portugal or Spain could be next in line for a bailout. The euro shed another 0.3 percent yesterday at US$1.3297, just above Wednesday's two-month low of US$1.3282.
Experts say that while rescuing Greece, Ireland or Portugal is manageable for the EU's 750 billion euro (US$1 trillion) emergency fund, bailing out Spain - which is five times larger than any of the other three countries - would test its limits.
Following a meeting where the euro crisis was on the agenda, the foreign ministers of France and Germany expressed confidence that their nations would be able to provide swift assistance for Ireland, as they did earlier this year for Greece. Merkel was to speak yesterday with French President Nicolas Sarkozy on the issue.
They said that Dublin's latest austerity measures would help shore up confidence in the euro. At the same time, they warned that the EU needs better policies to pre-empt other countries from spiraling into crisis, alongside mechanisms to intervene once a crisis occurs.
French Foreign Minister Michele Alliot-Marie said Europe is facing a "speculative attack" against the euro "in which those countries that could appear weak in the eyes of speculators are put under pressure."
Alliot-Marie underlined the importance of intervening quickly in markets to prevent further destabilization and the need for a permanent set of regulations, such as those to take effect in the EU in 2013.
"Now we want to reinforce these regulations to have a crisis mechanism that allows us not only to react, but to prevent these speculative attacks," Alliot-Marie said.
Her German counterpart, Guido Westerwelle, warned that market speculation only poses a danger when the fundamentals of a country's finances are weak.
Klaus Regling said in comments printed in Germany's Bild newspaper yesterday that while the euro could slip in value, the problems afflicting its weakest members are not putting the common currency in jeopardy.
"There's zero danger," he says. "No country will voluntarily give up the euro - for weaker countries that would be economic suicide, likewise for the stronger countries."
He says he agrees with Chancellor Angela Merkel, however, that Europe is in "a very serious situation regarding the euro."
The common currency has been hit hard in the past few weeks by the flare-up in the debt crisis, Ireland's request for financial aid and fears Portugal or Spain could be next in line for a bailout. The euro shed another 0.3 percent yesterday at US$1.3297, just above Wednesday's two-month low of US$1.3282.
Experts say that while rescuing Greece, Ireland or Portugal is manageable for the EU's 750 billion euro (US$1 trillion) emergency fund, bailing out Spain - which is five times larger than any of the other three countries - would test its limits.
Following a meeting where the euro crisis was on the agenda, the foreign ministers of France and Germany expressed confidence that their nations would be able to provide swift assistance for Ireland, as they did earlier this year for Greece. Merkel was to speak yesterday with French President Nicolas Sarkozy on the issue.
They said that Dublin's latest austerity measures would help shore up confidence in the euro. At the same time, they warned that the EU needs better policies to pre-empt other countries from spiraling into crisis, alongside mechanisms to intervene once a crisis occurs.
French Foreign Minister Michele Alliot-Marie said Europe is facing a "speculative attack" against the euro "in which those countries that could appear weak in the eyes of speculators are put under pressure."
Alliot-Marie underlined the importance of intervening quickly in markets to prevent further destabilization and the need for a permanent set of regulations, such as those to take effect in the EU in 2013.
"Now we want to reinforce these regulations to have a crisis mechanism that allows us not only to react, but to prevent these speculative attacks," Alliot-Marie said.
Her German counterpart, Guido Westerwelle, warned that market speculation only poses a danger when the fundamentals of a country's finances are weak.
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