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

10th May 2010, Comments 0 comments

German 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.

Germany's participation in the EU rescue package requires parliamentary approval however, and Merkel said she planned to meet party leaders later on Monday and that her cabinet would examine the necessary legislation on Tuesday.

But she added that approval of the legislation would take "a bit longer" than the passage of a law rushed through last week that gave the green light to Germany's 22.4-billion-euro (29.2-billion-dollar) contribution to a 110-billion-euro package of loans to Greece.

Global stock markets and the euro rocketed on Monday after the EU and IMF agreed the unprecedented rescue package for the eurozone, staunching a crisis that threatened to derail global economic recovery.

© 2010 AFP

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