(See EXT4 <GO> for more on the debt crisis and GMEET <GO> for G-20 meeting.)
Oct. 14 (Bloomberg) -- German Chancellor Angela Merkel said that banks are going to have to shoulder part of the euro sovereign debt crisis costs.
“We want and we have to make sure that banks and other investors share the costs of getting over the crisis,” Merkel said in a speech to trade unionists today in Karlsruhe, Germany.
European officials are crafting a rescue plan that may include deeper investor losses on Greek bonds, higher bank capital levels and increased firepower for bailouts and the International Monetary Fund. European leaders may complete the plan at an Oct. 23 summit and present it to a gathering of Group of 20 chiefs Nov. 3-4.
Merkel said that euro bonds “aren’t a wonder drug” for the crisis and wouldn’t help at the moment.
“They would reward highly indebted states with lower interest rates while giving us higher interest rates,” she said. “Therefore, it is my deep conviction that euro bonds won’t help us under the present conditions.”
Merkel said any Greek debt writedown should only take place after careful preparation and under specific conditions.
“A Greek debt writedown, even if it takes place, should only be ventured after careful and conscientious preparation in order to prevent anything worse from happening and to pave the way for structural reforms,” Merkel said.
--With assistance from Eddie Buckle in London. Editors: Leon Mangasarian, James Hertling.
To contact the reporter on this story: Stefan Nicola in Karlsruhe, Germany, at firstname.lastname@example.org
To contact the editor responsible for this story: James Hertling at email@example.com