Global Biz

Euro zone working on package to solve crisis: Germany

(Agencies)
Updated: 2011-01-13 09:35

BERLIN - Euro zone countries are working on a "comprehensive package" to solve the bloc's debt crisis which could be agreed by February or March, German Finance Minister Wolfgang Schaeuble said on Wednesday.

Related readings:  Euro drops on debt concern  China will continue to buy Spanish debt  Euro depreciation hits exporters  EU calls for coordinated action to fight eurozone crisis

"We can't just solve the problems over the short term - if there are short-term problems - but also over the mid term," Schaeuble told reporters, adding that euro zone states were trying to reach agreement on a "comprehensive package".

The Financial Times, citing unnamed people familiar with the situation in Berlin and Brussels in its Thursday edition, said Germany was backing proposals to give new powers and lending capacity to a euro zone rescue fund even if it meant increasing its financial guarantees.

Schaeuble did not say whether the package would involve an increase in the volume of the rescue fund set up in May to protect the single currency, although the European Commission has been pressing for this.

He said he did not expect an agreement on the package at Monday's meeting of euro zone finance ministers, but said a deal could be reached at one of the upcoming European Union summits in February or March.

Germany had already held discussions about the package with France, Italy and International Monetary Fund Managing Director Dominique Strauss-Kahn, Schaeuble said.

Angela Merkel's spokesman Steffen Seibert said the German chancellor had met Strauss-Kahn in Berlin on Wednesday.

"No decisions were made about future measures," he said.

Schaeuble also noted that Portugal's successful debt auction on Wednesday was a positive bit of news for the bloc.

"It's an encouraging sign that the Portuguese bonds were sold better than many people had feared," he said.

Portugal is seen as the next euro zone candidate that will need a bailout but passed a key market test on Wednesday selling a benchmark 10-year bond at a lower yield than in the previous auction and drawing strong demand.