Investors must pay for future debt crises: Merkel

18th November 2010, Comments 0 comments

German Chancellor Angela Merkel reiterated her determination on Thursday that investors should contribute to the costs of a future eurozone debt bailout but stressed this applied to future rescues only.

"We in the federal government are absolutely convinced it is necessary that creditors contribute to the cost in any future -- and I underline 'future' three times so that the markets understand -- mechanism," said Merkel.

Previous comments to this effect by Merkel have rocked jittery markets, as they feared she was pushing for investors to pay for current debt crises, such as that destabilising Ireland.

Merkel has insisted she wants a permanent crisis mechanism within the eurozone from mid-2013 but this has spooked potential investors in the bonds of struggling countries in the 16-nation zone.

"It is important and right that we make clear as soon as possible the conditions for the future, so there is no uncertainty on the markets," said Merkel.

Turning to the current difficulties faced by debt-stricken Ireland, Merkel said: "We have a European support mechanism and if a country believes it needs to use it, that's what it is there for."

European Union and International Monetary Fund officials are in Ireland to assess the financial situation there, as the head of the country's central bank said he expected a loan of "tens of billions" of euros (dollars).

The three rescue net put in place for eurozone countries after the Greek debt crisis expires in 2013. Analysts say that one key factor behind the current crisis in the eurozone is uncertainty among investors about what will happen when the arrangement comes to the end of its life.

© 2010 AFP

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