BERLIN — The 16-nation euro currency will survive the debt crisis, German Chancellor Angela Merkel declared Thursday, while insisting that investors must share the burden of bailouts starting in 2013.
Merkel's comments came as the euro wallowed near two-month lows against the dollar and some analysts predicted it would drop further as other heavily indebted countries, like Portugal and Spain, risk following Greece and Ireland in needing a bailout. The euro was down 0.3 percent Thursday at $1.3297.
"I'm more confident than (I was) this spring that the European Union will emerge strengthened from the current challenges," Merkel told business leaders in Berlin, referring to May's €110 billion bailout of Greece by the EU and IMF.
Experts say that while rescuing Greece, Ireland or Portugal is manageable for the EU's €750 billion ($1 trillion) emergency fund, bailing out Spain — which is five times larger than any of the other three countries — would test its limits and threaten the euro's existence.
The leaders of Germany and France, the eurozone's twin economic engines, will discuss the debt crisis in a telephone conversation later Thursday.
Merkel's statement was echoed by the head of the EU's bailout fund, Klaus Regling. "No country will voluntarily give up the euro — for weaker countries that would be economic suicide, likewise for the stronger countries," Regling said in comments printed in Germany's Bild newspaper Thursday.
Merkel insisted on setting up new rules to deal with sovereign debt problems that would come into effect after 2013.
She stressed that there is no eurozone member at the moment that would require debt restructuring.
At an EU summit in October, Merkel pushed for the creation of a permanent crisis resolution mechanism that would ensure private creditors shoulder some of the cost of future bailouts.
The new crisis mechanism is supposed to replace the €750 billion financial backstop set up by eurozone governments and the International Monetary Fund in May, after intervention to save Greece.
Analysts and politicians have blamed Germany's insistence to have new rules for the recent rise in interest rates on Irish, Portuguese and Spanish bonds. A statement by EU finance ministers that the mechanism would not apply to outstanding debt, but only to bonds issued after 2013, has failed to abate market tension.
The EU's executive commission will release its plan for the new bailout rules in early December.
Earlier in the day, the Foreign Ministers of France and Germany said they were confident their nations would be able to provide swift assistance for Ireland, but warned against the danger of speculating on the next victim of the spiraling debt crisis.
French Foreign Minister Michele Alliot-Marie said Europe is facing a "speculative attack" against the euro "in which those countries that could appear weak in the eyes of speculators are put under pressure."
Alliot-Marie underlined the importance of intervening quickly in markets to prevent further destabilization and supported Merkel's call to set up the new bailout mechanism.
"Now we want to reinforce these regulations to have a crisis mechanism that allows us not only to react, but to prevent these speculative attacks," Alliot-Marie said.
Gabriele Steinhauser in Brussels contributed to this report
- 10 things to know about corporate inversions
- Running again? Mitt Romney tells Hugh Hewitt...
- It's about time the government recognize the...
- University of Phoenix founder dies, leaving...
- A New York Times article said Michael Brown...
- Obama tamps down prospect of strikes in Syria
- Angelina Jolie, Brad Pitt wed privately at...
- UN: Ebola cases could eventually reach 20,000
- A New York Times article said Michael... 43
- Running again? Mitt Romney tells Hugh... 36
- For the first time in American history,... 30
- 10 things to know about corporate... 29
- Doug Robinson: When did Missouri turn... 24
- Why the poverty cycle is harder to... 15
- Winning plaintiffs in 3 states want... 14
- Mourners gather in St. Louis for Brown... 13