Lenders 'not responsible' for bail-out
Published 15/12/2010 | 05:00
LENDERS to eurozone governments should not have to share the cost of bailing out indebted countries and the onus is on governments to rein in budgets and reassure lenders, the Danish Finance Minister, Claus Hjort Frederiksen, said yesterday.
"It's important that the countries consolidate in a convincing way, to tell the markets that they are on the right track," Mr Frederiksen said.
Asked whether Europe should force debt investors to foot part of the bill on subsequent bailouts, he said: "I don't think so, frankly."
European Union leaders will this week discuss the creation of a permanent mechanism to support over-indebted countries. German Chancellor Angela Merkel was forced to water down demands that bondholders share future bailout costs, instead of heaping the full burden on taxpayers.
Ireland's decision on November 28 to accept a bailout has failed to quell concerns that Europe's debt crisis is spreading.
The cost of insuring Portuguese, Spanish and Italian bonds climbed as investors bet on possible defaultsdefaults.
The European Stability Mechanism could be extended beyond the 16-member euro region to all 27 countries in the EU, Mr Frederiksen suggested.
Denmark is not a member of the eurozone but the Danish krone is pegged to the euro in a narrow band.
"The euro is part of the solution," Mr Frederiksen said. "It wasn't the euro that created the problem we are in now. It was irresponsible economic policy in some countries that has led to this."
"As the regulation concerns all European countries, it's important that we can join the mechanism," he said.
"It's important that the difference in regulation is as small as possible between the eurozone countries and the EU 27." (Bloomberg)