Chancellor Angela Merkel told Russian President Vladimir Putin that Germany is “doing everything” to ensure that the euro remains a stable currency and that the debt crisis ends “as quickly as possible.”
Merkel, hosting Putin on his first foreign trip since he returned to the presidency last month, sought to reassure the Russian leader over the financial turmoil in Europe that has driven the euro to a two-year low against the dollar and prompted investors to pay for the security of benchmark German bonds. German two-year yields fell below zero today.
Russia does more than 50 percent of its trade with European Union countries, so “of course we are very much interested in the euro zone becoming stable,” Putin told reporters at a joint press conference with Merkel in Berlin today. Russia has “an interest in the normal functioning of the European economy.”
Russia holds about 40 percent of its reserves in euros, Putin said. “A significant part of them, and I mentioned this to Chancellor Merkel today, are in German state bonds,” Putin said. “It’s true that they don’t yield much, but we see them as stable.”
Putin, who will travel on to Paris for talks with French President Francois Hollande later today, declined to endorse euro bonds, saying only that he could imagine them being used at some point in the future “after stability and order is fully guaranteed in the economy.”
Putin said the matter was not discussed in detail. “But according to the logic of what Germany continues to do, I would say that the German leadership doesn’t want problems in the euro zone to keep coming back and back.”
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