Greek deal is not step to buy debt of others
Source: Agencies |
August 1, 2011, Monday
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Print Edition
Print Edition
GERMAN Finance Minister Wolfgang Schaeuble denied last Saturday that July's Greek bailout deal paves the way for a future 'transfer union' in which eurozone countries are liable for each others' debts.
Schaueble's remarks in a newspaper interview published yesterday followed his attempt earlier last week to reassure conservative political colleagues that a new eurozone rescue fund would not have 'carte blanche' to buy bonds of states in difficulty.
Bundesbank President Jens Weidmann has warned that the 109 billion euro (US$157 billion) aid package for debt-stricken Greece weakened incentives for eurozone countries to maintain solid finances and led toward a fiscal transfer union.
"I don't like the term as it only leads to misunderstandings and has nothing to do with the outcome of the summit," Schaeuble told the Frankfurter Allgemeine Sonntagszeitung.
"We are not harmonizing interest rates. We are not collectivizing debt risk. The requirement to make savings, which is tied to the aid, exerts a disciplinary effect on the states that receive it," Schaeuble said.
German Economy Minister Philipp Roesler last Wednesday urged German firms to invest in Greece, seeing opportunities to those in Poland after the fall of communism.
Schaeuble offered a different analogy.
"Greece now has the toughest job to do," he said. "Just ask people from the former East Germany what it's like to suddenly face the competitive pressure of being in a common currency area."
After German reunification in 1990, and the conversion of their currency to the mark, regions formerly in East Germany saw massive unemployment.
Schaueble's remarks in a newspaper interview published yesterday followed his attempt earlier last week to reassure conservative political colleagues that a new eurozone rescue fund would not have 'carte blanche' to buy bonds of states in difficulty.
Bundesbank President Jens Weidmann has warned that the 109 billion euro (US$157 billion) aid package for debt-stricken Greece weakened incentives for eurozone countries to maintain solid finances and led toward a fiscal transfer union.
"I don't like the term as it only leads to misunderstandings and has nothing to do with the outcome of the summit," Schaeuble told the Frankfurter Allgemeine Sonntagszeitung.
"We are not harmonizing interest rates. We are not collectivizing debt risk. The requirement to make savings, which is tied to the aid, exerts a disciplinary effect on the states that receive it," Schaeuble said.
German Economy Minister Philipp Roesler last Wednesday urged German firms to invest in Greece, seeing opportunities to those in Poland after the fall of communism.
Schaeuble offered a different analogy.
"Greece now has the toughest job to do," he said. "Just ask people from the former East Germany what it's like to suddenly face the competitive pressure of being in a common currency area."
After German reunification in 1990, and the conversion of their currency to the mark, regions formerly in East Germany saw massive unemployment.
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