ROME (MNI) – Italian Prime Minister Mario Monti said Thursday that
he saw evidence of a “euro rejection” movement, including a growing
north-south divide between creditor and debtor nations within the
17-member Eurozone.

Italy, he said, will do everything it can to stay in the single
currency.

“Our government is determined to stay within the euro, and we are
doing everything we can on a national and European level,” Monti said,
addressing a conference here via video link. “It would be sending out
the wrong message to draw up a study of the possible effects of dropping
out of the euro.”

The Eurozone debt crisis has been increasingly accentuated in
recent months amid concerns about a possible Greek exit from the euro
area and the sustainability of the public finances of weaker member
nations such as Italy and Spain.

The citizens of northern creditor countries are increasingly
resentful of what they see as the bankrolling of the weaker nations such
as Italy, Spain and Greece – though their protests may have lost some
steam after the European Central Bank’s announcement of a new bond
buying plan intended to control sovereign bond yields.

A German court on Wednesday approved Berlin’s participation in the
new bailout fund, the European Stability Mechanism, which is an
indispensable participant in the ECB’s plan to purchase sovereign debt.
The court decision to let the ESM move forward removes the last obstacle
to its launch, since Germany was the only country not to have ratified
it yet. The judges’ ruling was widely seen as a victory for German
chancellor Angela Merkel.

The decision allows EU leaders to mobilize the ESM’s E500 billion
warchest, seen as the heart of the “firewall” erected to address the
crisis.

The Luxembourg-based ESM, which replaces the temporary bailout
fund, the EFSF, will be empowered to buy sovereign bonds in the primary
market, which would complement ECB purchases in the secondary market. It
would also fund bailout deals and “precautionary” credit lines for
sovereign states, which are a pre-requisite for governments seeking
intervention from the ECB.

Still, many issues remain unresolved, including whether Greece will
be given extra time – and money – to achieve its required fiscal goals,
and whether the government in Madrid will seek an aid deal with the ESM
in order to qualify for ECB bond intervention.

However, the German court decision Wednesday and the ECB bond
buying announcement a week ago have significantly calmed financial
markets, boosting the euro to a four-month high.

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