German Chancellor Angela Merkel said yesterday the euro was a “stable currency,” but in a veiled dig at Greece and other shaky economies, said some eurozone members must sharpen their competitiveness and fiscal rectitude.
The leader of Europe’s largest economy also gave fulsome backing to French Minister of Economic Affairs, Finances and Industry Christine Lagarde in her bid for leadership of the IMF, saying Lagarde was “ideal” for the job.
Merkel said the single European currency was not the root of Europe’s current travails.
Photo: EPA
“Let me tell you very clearly: We don’t have a problem with the euro as such,” Merkel said at a forum in Singapore. “It is a stable currency, particularly if you look at it vis-a-vis the [US] dollar.”
However, in an apparent reference to Greece and other eurozone members with debt problems, Merkel said the eurozone region had “a competition problem, a competitiveness problem.”
“So this is why we have said right from the start we need to boost competitiveness and we need to put fiscal responsibility and fiscal soundness at the very heart of our efforts,” Merkel said.
Improving economic competitiveness is key to overcoming the challenge facing the eurozone’s 17 members, Merkel said.
“Because the competitiveness of the member states in the euro area is too disparate, some of them are too weak as regards their competitive situation and the question is obviously how can we overcome this crisis,” Merkel said.
“A common currency actually requires also that competitiveness is not as unequal as it is now. There needs to be more cohesion and more convergence there,” she said.
The common European currency has benefited the German economy and Berlin remains committed to the euro, she added.
Merkel’s comments come amid growing expectations that the EU will provide new aid to Greece as the eurozone struggles to fix its finances despite a 110 billion euro (US$158.3 billion) bailout agreed with Athens and the IMF.
Support from Germany, the eurozone’s economic powerhouse, is vital in any further bailouts for its fiscally strapped neighbor.
On the IMF succession, Merkel said Lagarde was well qualified to head the body and urged emerging countries to give her an “objective” assessment amid calls for a non-European to lead the body for the first time.
The IMF is scheduled to publish a full list of candidates by June 17. The final selection is expected to be announced by June 30.
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