Merkel fights for 'primacy' over markets to shift crisis risk
German Chancellor Angela Merkel said that she’s engaged in "a battle" with financial markets to compel investors to shoulder some of the risk for future euro-area debt crises.
Merkel, in a speech to insurers in Berlin today, reiterated that a permanent crisis-resolution mechanism is needed for the euro area once the €750bn rescue fund mandate expires in 2013.
The safety net must include provisions that force investors and not just taxpayers to assume risk, she said.
“It’s true that there is a kind of battle,” with politicians seeking “primacy” over the markets, Merkel said.
Merkel’s comments echo language she used in May immediately after backing aid for Greece, and underscore her determination to stand firm on the debt mechanism which is to be drafted by the middle of December.
European Central Bank President Jean- Claude Trichet and indebted euro-area governments including Ireland, Spain and Greece have criticised Merkel’s stance for worsening those countries’ debt woes.
Ireland is free to apply if needed to the rescue fund, which was established in May precisely for cases such as Ireland’s, Merkel said.
“As far as Ireland is concerned, we have a euro safety net,” Merkel said. “And if a country wants to use it, all I can say is that this is what it was created for.”