Thursday 22 February 2018

Debt Crisis: Schaeuble and Geithner confident eurozone reform will work

German Finance Minister Wolfgang Schaeuble
German Finance Minister Wolfgang Schaeuble

Jan Strupczewski

GERMAN Finance Minister Wolfgang Schaeuble and U.S. counterpart Timothy Geithner said on Monday they were confident the countries of the euro zone would implement reforms needed to overcome their sovereign debt crisis.

In a statement issued after talks on a blustery German island in the North Sea where Mr Schaeuble is holidaying, the two men said their countries would cooperate closely to stabilise the global and European economies.

Mr Geithner's trip to the remote island, against a backdrop of stormy weather and heavy seas, underlined U.S. concerns about a euro zone crisis that now threatens the wider global economy and U.S. President Barack Obama's re-election hopes in November.

"(The two men) emphasised the need for ongoing international cooperation and coordination to achieve sustainable public finances, reduce global macroeconomic imbalances, and restore growth," they said in their statement.

"Both expressed confidence in euro area member states' efforts to reform and move towards greater integration," said the statement, issued shortly after their talks in an elegant hotel on the island. The two men gave no news conference.

They cited Ireland's success in placing longer term bonds and fiscal and structural reforms in Italy and Spain as examples of such efforts.

Their statement also referred to comments by several European leaders in recent days - including German Chancellor Angela Merkel and European Central Bank president Mario Draghi - to do whatever is necessary to save the euro.

Financial markets have rallied in recent days on expectations that the ECB will back up Mr Draghi's rhetoric with bold action, possibly the resumption of its controversial bond-buying programme.

Washington has long urged bolder steps to tackle the euro crisis, but Germany, Europe's largest economy, remains deeply uneasy about the ECB buying up debt on the secondary market or adopting other unconventional measures that could undermine its core role of pursuing price stability.


Earlier, a German finance ministry spokeswoman played down suggestions that the meeting on the sparsely populated island about six hours' drive from Berlin amounted to crisis talks.

"It's not an unusual thing for the minister to meet a visitor on his holiday. It's a normal procedure. Because the minister is on holiday, the meeting is happening there."

Mr Schaeuble had been hoping to forget the euro zone crisis for a few weeks on Sylt and said in one newspaper interview that he planned to "read a few books" and "clear my head".

He said another aim for his holiday was "not to be put on the spot too much by journalists" for a few weeks.

But the spokeswoman played down suggestions that the meeting amounted to crisis talks.

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