Germany’s Schaeuble Says Root Of Crisis Needs To Be Tackled
fxbom.com
03:14 PM
FRANKFURT (Dow Jones)-German Finance Minister Wolfgang Schaeuble said Wednesday that Europe needs to deal with the origin of the current crisis, namely unsustainable fiscal policy.
He also wouldn’t budge on his government’s position that common euro-zone bonds are not the solution to solving the euro zone’s debt crisis, saying this would reduce incentives for countries to make fiscal adjustments.
“The origin of the crisis must be removed,” he said.
Above all, Schaeuble said that Europe needed to “win back the trust of financial markets.”
He told German state radio Deutschlandfunk that Ireland and Portugal, two of the countries along with Greece, that are in European Union and International Monetary Fund bailout programs, are “on the right path.”
But he said that Greece “cannot be spared the process of adjustment.”
He urged the E.U. to act quickly to change its treaty. Rather than implement common euro-zone bonds, Germany would rather see tougher fiscal rules in the euro zone, namely sanctions against countries that break the rules on debt and deficit limits.
This could happen through changes to the E.U.’s governing treaty, but a number of E.U. countries are opposed to Germany’s efforts to change the treaty.
Schaeuble also said that Germany would lower its deficit in a way that would remain “growth friendly.” He repeated that Germany is an “anchor of stability” and a “growth motor” in Europe.
The European Commission will make a proposal on common euro-zone bonds, or what it calls “stability bonds,” Wednesday.
-By Todd Buell, Dow Jones Newswires, +49-6929725514 , todd.buell@dowjones.com
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