Germany eyes eurozone firewall of 'around 800bn euros'

29th March 2012, Comments 0 comments

Germany's finance minister said Thursday the eurozone would soon have a firewall against the debt crisis of "around 800 billion euros", on the eve of a crunch EU meeting to discuss the issue.

Speaking at a conference at Copenhagen University ahead of a key two-day meeting of European finance ministers starting Friday, Wolfgang Schaeuble said that ministers would thrash out what he called a "new financial institution".

He explained that alongside the 500 billion euros maximum agreed in the new bailout fund that comes into effect in July can be added money already loaned out to crisis-hit countries, plus some 60 billion in European Union funds.

The total, he said, was "about 800 billion euros (over $1 trillion) ... to fight contagion to protect our stability," he said.

"It's convincing, it's sufficient. We will have a similar protection by the IMF as we got in the last two years and then I think we can be optimistic that it can work."

"It's a good solution and I think we should all get behind it," he added.

"I think it's enough."

Eurozone ministers are set to bolster their defences against the crisis by increasing the volume of their firewalls to prevent contagion to larger nations such as Italy and Spain.

Several options are on the table but there is little agreement in the bloc, with France calling earlier Thursday for around one trillion euros but Germany more reticent.

Until now, Berlin has mooted a figure of around 700 billion euros and Schaeuble insisted he was not talked about new figures.

Top and emerging economies that make up the group of 20 (G20) have insisted that they will only increase their lending to the International Monetary Fund to help fight the eurozone crisis if the bloc first stump up its own cash.

Speaking at the same conference, Danish Economy Minister Margrethe Vestager, who will chair the meeting as Denmark currently holds the rotating EU presidency, predicted: "The euro will survive the crisis, I'm confident it will."

"I'm sure that the euro will come out of the crisis in better shape."

She said there had been a lot of "drama queen debate" about the potential survival of the currency bloc but insisted that the euro had "done its job" by ensuring low inflation and a stable exchange rate.

For his part, Schaeuble stressed that "no country will be forced to leave the eurozone."

He also said that the eurozone needed to undertake wholesale reforms, especially in its labour markets, if it were to emerge stronger from the crisis.

"You can spend as much money as you want, if you don't have the structures, it doesn't work," he said.

© 2012 AFP

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