Saturday 22 October 2016

Germany looking at two-currency idea for Greece

Birgit Jennen and Rainer Buergin

Published 23/05/2015 | 02:30

Wolfgang Schaeuble, Germany's finance minister
Wolfgang Schaeuble, Germany's finance minister

German Finance Minister Wolfgang Schaeuble raised the possibility that Greece may need a parallel currency alongside the euro if the country's talks with creditors fail, people familiar with his views said.

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Mr Schaeuble mentioned the idea of parallel currencies at a recent meeting without endorsing it, according to two people who attended and asked not to be identified because the gathering was private.

He also cited the example of Montenegro, which uses the euro but isn't a member of the currency union, one person said.

The comments suggest that some in Germany are preparing for the worst amid a standoff with Greece that has dragged on since February. While Chancellor Angela Merkel and her finance minister say the goal is to keep Greece in the euro, Mr Schaeuble has also said he wouldn't rule out a Greek exit from the 19-nation currency.

Germany is "ready to take this brinkmanship very far", with Mr Schaeuble in the role of "attack dog", Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington, said.

"The risks of contagion to other euro-area countries from a deterioration in Greece is very low." The German Finance Ministry yesterday called the account of Schaeuble's remarks "inaccurate" in a Twitter post, saying "this sort of scenarios is not up for debate".

When asked on Thursday to comment on Schaeuble's position on a parallel currency, the Finance Ministry cited his interview with Les Echos this week where he said that "we take note of the discussion but we are not commenting on it".

Irish Independent

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