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Germany, France vow to do 'protect eurozone' - Daily News Egypt

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Germany, France vow to do ‘protect eurozone’

Berlin (AFP) — The leaders of Germany and France threw their political support Friday behind ECB chief Mario Draghi’s vow to do “everything” to protect the eurozone, after another brutal week of market turmoil. German Chancellor Angela Merkel and French President Francois Hollande said in a joint statement released in Berlin and Paris after a …


Berlin (AFP) — The leaders of Germany and France threw their political support Friday behind ECB chief Mario Draghi’s vow to do “everything” to protect the eurozone, after another brutal week of market turmoil.

German Chancellor Angela Merkel and French President Francois Hollande said in a joint statement released in Berlin and Paris after a telephone talk that they were determined to keep the single currency area intact.

“Germany and France are deeply committed to the integrity of the eurozone. They are committed to do everything to protect the eurozone,” they said.

The statement borrowed from remarks Draghi made in London on Thursday, in which he vowed to “do whatever it takes to preserve the euro”, delighting long-suffering financial markets and giving the beleaguered euro a lift.

Merkel and Hollande, leaders of the two biggest economic powers in the eurozone, indicated that their solidarity must be matched with serious economic and fiscal reform efforts.

“In order to achieve this, the (eurozone) member states and European institutions must live up to their respective responsibilities,” they wrote.

“Both countries stress the necessity to implement quickly the conclusions of the European Council” in late June.
Aides to Hollande said ahead of the phone call that he and Merkel would discuss economic reforms proposed at last month’s EU summit and in particular how they apply to struggling Spain.

The accord last month paved the way for the eurozone’s future 500-billion-euro ($616 billion) bailout fund to recapitalise ailing banks directly, without adding to the national debts of struggling countries.

Hollande said Wednesday he wanted a “rapid and firm implementation” of the reforms agreed at the summit, adding that EU leaders needed to match the speed with which markets were reacting to the eurozone’s debt woes.

German Finance Minister Wolfgang Schaeuble had earlier welcomed Draghi’s pledge but also urged countries to pursue crucial reforms.

“The finance minister welcomes the latest remarks from president Draghi on taking the necessary measures in the framework of the existing ECB mandate to preserve the euro,” his ministry said in a statement.

“The condition for this is that policymakers introduce and implement the necessary measures to manage the financial and confidence crisis. The most important thing is the reform efforts of the member countries themselves.”

Schaeuble singled out Spain and Italy for taking “decisive steps” to rein in their public finances and restore stability and said programmes in Portugal and Ireland were “on the right track”.

And he noted that EU leaders had tasked the head of the European Commission, the eurozone finance ministers’ Eurogroup and the ECB with drawing up a roadmap for the future of the EU and the eurozone with stronger institutions.

At a regular briefing, a finance ministry spokeswoman declined to comment on speculation Draghi had hinted at a resumption of a hotly contested ECB programme of buying up the sovereign bonds of debt-wracked eurozone countries that are finding it difficult to drum up financing in capital markets.

Schaeuble did not mention the ECB bond-buying scheme directly but the Bundesbank, Germany’s central bank, said it remained opposed to it.

“Our opinion regarding the SMP programme has not changed,” a spokesman told AFP, referring to the Securities Market Programme set up in 2010.

Bundesbank officials argue the programme is tantamount to so-called monetary financing, where the central bank effectively prints money to pay off a country’s debt, something expressly forbidden under the ECB’s statutes.

 

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