Debt crisis
November 24, 2010
The European Commission on Wednesday rejected German suggestions that the bloc's common currency was in danger. A spokesman for the EU's economic and monetary affairs commissioner, Olli Rehn, insisted that the euro was a "stable" currency and that its continued existence was not threatened by eurozone debt or banking crises.
He was reacting to a statement by Angela Merkel, in which the German chancellor said Europe was in an "extraordinarily serious situation." Merkel said Germany's support for Ireland was conditional on Ireland "making clear what steps (it) must take to get back on a path of stabilization."
Merkel added that Europe should have the "courage" to set limits on markets by ensuring that private investors bear some of the risk of future eurozone bailouts.
The chancellor said Germany would look "positively" on Ireland's request, reportedly worth some 85 billion euros (114 billion dollars).
Future of euro at stake: minister
German Finance Minister Wolfgang Schaeuble told the Bundestag on Tuesday that the future of the euro was "at stake" in the Irish crisis.
With its banking system in crisis and its budget deficit forecast to be 10 times the EU limit of three percent of GDP this year, Ireland on Sunday became the second eurozone member in six months to apply for a bailout after Greece.
During Wednesday's parliamentary debate Merkel argued in favor of involving private investors to bear some of the risk on government bonds. Merkel reiterated that the European Union should set limits on the markets.
The opposition Social Democrats instead called for more equality on European tax rates.
Some EU members states believe that Ireland's low corporate tax rate percent is unfair competition.
With the jury still out on whether Germany's contribution to the Greek bailout is compatible with German law, the German constitutional court will be watching how the Irish rescue package closely.
In reaction to the Irish debt crisis and the Portuguese general strike the euro on Wednesday sank below 1.33 dollars for the first time in two months.
Author: Nigel Tandy (dpa/AFP/Reuters)
Editor: Chuck Penfold