German finance minister criticises bailout 'speculation'

12th December 2010, Comments 0 comments

German Finance Minister Wolfgang Schaeuble on Sunday criticised "speculation" that Portugal and possibly Spain would require a bailout, but stopped short of a denial that such action would be required.

Asked in an interview with broadcaster ARD whether the two eurozone nations would require financial aid before the end of the year, Schaeuble replied: "I am opposed to all this sort of speculation."

"It must be seen that it is extremely unpleasant for countries concerned to call for bailout funds. We have seen this with Greece, with Ireland... The Irish government hesitated a lot to take this step," said Schaeuble.

Ireland last month followed Greece in accepting emergency rescue funds, with Portugal strongly expected to follow as borrowing costs have hit dangerous levels. The state of the Spanish finances have also raised concerns that it may eventually require help.

Schaeuble rejected the suggestion that the eurozone would need to increase its emergency fund.

"To save Ireland, we did not even use 10 percent of the resources at our disposal. That is why we do not need to speculate on the need to increase this fund or not," he said.

"The main problems on the world financial markets are not found in Europe," he said.

The EU decided on May 9 to create a 750-billion-euro (992-billion-dollar) joint fund with the International Monetary Fund, a mixture of loans and guarantees from eurozone and EU partners for troubled states.

European leaders are to hold summit talks next week aimed at shoring up the embattled euro.

Schaeuble, who has given a series of interviews in recent days to defend the stability of the euro, also reiterated the German rejection of eurobonds, a common bond proposed this week that would enable eurozone countries to pool their borriwing capacity.

Schaeuble said varying debt rates were the only way to push members towards budgetary responsibility.

© 2010 AFP

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