Bloomberg News

Germany Rejects ‘Ever Bigger’ Firewalls, Schaeuble Says

February 27, 2012

(Updates with Schaeuble comments starting in third paragraph. For more on the G-20, see GMEET.)

Feb. 25 (Bloomberg) -- German Finance Minister Wolfgang Schaeuble rejected calls to make rescue funds “ever bigger” and reiterated the opposition of Europe’s biggest economy to joint euro-area debt issuance as means to fight the debt crisis.

Writing in an op-ed in Mexican newspaper El Universal published on Feb. 24 and distributed to German reporters today, Schaeuble said that debt burdens can’t be lowered “by inflating it away,” and that debt-based strategies “stunt” growth in the long term.

“Should we also mutualise sovereign debt in the euro zone?” Scaheuble said in the article. “Should the European Central Bank print money to finance the member states’ budgets? Should we make the firewalls ever bigger? The answer is an empathic no.”

Schaeuble’s comments harden Germany’s stance going into a meeting in Mexico City beginning today of Group of 20 finance ministers and central bank governors that is dominated by efforts to stem Europe’s debt crisis. G-20 officials gather less than a week after Europe agreed to a second bailout for Greece in a bid to avert the euro-area’s first sovereign default.

“I dare to say that Europe has done its homework,” Schaeuble said in a speech in Mexico City today, referring to a range of measures endorsed by European leaders in October. “The tightening of the interest spreads within the euro zone in recent weeks shows that we’re on the right course.”

Schaeuble said that budget consolidation and more flexible labor markets and wages are necessary “if euro-zone countries want to grow in the long run, if we want the euro to be a stable and lasting currency,” Schaeuble said. “That’s the only way we’ll be able to restore confidence.”

--Editor: Alan Crawford

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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