EU aid fund serves to 'strengthen and protect' euro: Merkel

10th May 2010, Comments 0 comments

Germany Chancellor Angela Merkel said Monday that an emergency trillion-dollar rescue package for crisis-hit eurozone countries would serve to bolster the weakened euro currency.

"This package serves to strengthen and protect the common currency," she told reporters, hours after the European Union announced an unprecedented intervention worth more than 750 billion euros backed by the International Monetary Fund and central banks worldwide.

"We are protecting our currency in an extraordinary situation."

Merkel said that nevertheless the eurozone must do more to tackle its stability problem by pressing member states to balance their budgets.

"We must attack the problem at its roots," Merkel told reporters.

"In this process, budget consolidation in all member states becomes extraordinarily important."

Merkel welcomed new austerity measures pledged by Spain amid fears that the perilous Greek debt crisis could spread throughout the 16-nation eurozone, saying they sent "an important message to the markets."

She added that Germany as the eurozone's biggest economy would also introduce budget cuts to get its own fiscal house in order.

After days of plummeting in value on world markets, the euro surged in Asian trade Monday on the news of the rescue package, which leaders hope will represent a game-changing financial war chest in the face of damaging economic instability.

© 2010 AFP

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