POLITICIANS MARKED the 10th anniversary yesterday of the introduction of euro notes and coins by urging governments in the currency bloc to save and consolidate to survive the debt crisis.
While German finance minister Wolfgang Schäuble called the euro “a clear success story” and pledged the currency would remain stable, he also urged vulnerable debtor states to follow a tough savings course in 2012, boost their competitiveness and work to win back market confidence.
"This is not a euro crisis, it is a debt crisis in some euro states," he told German newspaper Bild.
The crisis that began in Greece more than two years ago has since forced the Republic and Portugal to seek bailouts and now threatens the efforts of the bloc’s third largest economy, Italy, to raise €450 billion in debt financing.
The head of Standard Chartered bank told a British Sunday newspaper that political leaders had yet to offer a meaningful solution to the crisis.
"We enter 2012 with a very difficult outlook for the euro zone . . . with an increasing possibility of countries actually leaving the euro zone," Peter Sands, chief executive of the Asia-focused bank, told the Sunday Telegraph.
German chancellor Angela Merkel warned that Europe had a long way to go in overcoming the crisis.
In Italy, President Giorgio Napolitano called for sacrifices. “No one today can shirk his or her responsibility to contribute to putting the public accounts on track and averting Italy’s financial collapse,” he said. “It’s hard to regain credibility after having lost so much ground, and our bonds – despite some encouraging signs in recent days – remain under attack in the financial markets.”
In France, the ECB’s Christian Noyer defended the currency union, saying the euro could yet become the world’s leading currency if leaders of the 17-nation bloc succeed in tightening fiscal integration.
European Union leaders agreed at an emergency summit on December 9th to draft a new treaty for deeper economic union, with Britain the only country among the 27 EU nations declining to join the initiative.
"If we implement all the decisions taken at the Brussels summit we will emerge stronger," Mr Noyer said in an article for Journal du Dimancheto mark the euro coin anniversary.
Elsewhere, Bundesbank president Jens Weidmann revived an analogy between overspending governments and alcoholics, saying some politicians reminded him of the drunk “who promises to be sober from tomorrow but asks for the schnapps bottle one last time today”. He said that Berlin, which has flouted European budget rules over the last 10 years, should also be saving more, particularly given its special responsibility as an anchor for the euro bloc.
In an interview with Berlin's Tagesspiegelnewspaper, Mr Weidmann praised the German government for cutting its deficit in 2011 but added: "The government's consolidation pause in the new year is not convincing . . . we need to see a balanced budget achieved swiftly."
The Bundestag has approved a 2012 budget which means net new borrowing of €26.1 billion, up from €22 billion in 2011.
