Germany’s finance minister says he is confident that Europe’s politicians will manage to stabilise the eurozone in 2012 and keep the continent’s common currency together.
In an interview with business daily Handelsblatt published on Friday, Wolfgang Schaeuble acknowledged that major problems that have built up over a long period still have to be tackled in some countries.
However, he added: “I think we will be far enough along in the next 12 months that we will have banished the dangers of contagion and stabilised the eurozone.”
Asked whether he could rule out the 17-nation eurozone breaking up, Schaeuble was quoted as saying: “According to everything that I know at the moment, yes.” He insisted that Europe’s politicians “are doing everything to prevent the common currency falling apart.
“Of course,” he added, “the European Union cannot force anyone to stay in if they don’t want to belong anymore. But no such development can be seen at the moment.”
Germany, Europe’s biggest economy, is a key player in the long-running battle to stem the eurozone debt crisis. It has backed the strategy of getting governments to embark on often-savage austerity measures to reduce deficits.
But it has opposed measures such as issuing jointly-backed Eurobonds, and argued that there is no quick fix to the crisis, expressing great scepticism about the wisdom of a major government bond-buying drive by the European Central Bank that is advocated by many as a way of forcing down the borrowing costs of struggling countries.
“The talk of bazookas and the like only leads to us not tackling the causes of the crisis in a sustainable manner,” Schaeuble was quoted as saying.
The eurozone will quickly face new challenges in 2012, with both Italy and Spain needing to borrow large amounts of money early in the New Year. Both countries face high borrowing costs.
Schaeuble acknowledged that Europe’s refinancing needs in early 2012 are “not trivial. But the more we win back confidence on the markets, the more investors... will invest in the eurozone, and not just in German bonds,” he said. “There is no shortage of money worldwide”.
“In case of doubt, a somewhat higher interest rate has to be paid for some government bonds,” said Schaeuble. “That is not damaging per se, and can also encourage the understanding that we have to tackle the actual causes of the crisis: overly high debts and a lack of competitiveness.”
He said he sees no sign of a credit crunch in Germany. Asked about other countries, he pointed to the ECB’s moves to provide massive long-term loans to banks.
“Given the measures the ECB has taken to provide banks with liquidity, it is hard to imagine that banks would not be in a position to provide sufficient loans to business,” he said.