BRUSSELS (MNI) – Germany would be amenable to the idea of
increasing the International Monetary Fund’s firepower on the basis of
bilateral agreements with EU countries, German Finance Minister Wolfgang
Schaeuble said Wednesday.

Speaking after the meeting of European finance ministers, Schaeuble
said that if the IMF wanted to increase its special drawing rights, this
could also be discussed.

He rejected the idea of quick-fix solutions to the crisis, saying
these would ultimately not work.

“We are willing for the funding of the IMF to be increased via
bilateral loans,” he said. “Naturally the details must be discussed.”

“And if the IMF would like to increase its room to maneuver with
more special drawing rights, we are ready to discuss this,” he added.

In general, he said, Germany is “glad that the IMF so strongly
involves itself” in dealing with the crisis. He rejected the idea that
bilateral loans between EU states and the IMF was tantamount to an
admission that Europe could not solve its own problems.

Schaeuble also continued to reject calls for simple solutions to
the crisis such as having the European Central Bank purchase bonds in
unlimited quantities, but stressed that rejection of such ideas was not
simply knee-jerk.

“The economic sense behind this is that each of these backdoor
solutions in reality would reduce the probability that the problem is
solved,” he said. “We would perhaps for a few months experience a
certain respite,” but ultimately not an end to the crisis.

Schaeuble said he was sure the crisis would be solved in the end,
“not in one step, but step by step.” The planned December 9 council
meeting “is indeed of a very high importance” in this context, he said,
adding that he was confident of an outcome that would help stabilize
markets.

“The faster we stop this process” of eroding market confidence,
“the more the problems will be relieved a little,” he said.
“Nevertheless, a considerable financing need remains for all the
countries of the Eurozone.”

“And we will see” how this can be addressed, he said. “We have
instruments. That is why it is good that the guidelines for the
implementation of the instruments of the EFSF were decided.”

On other topics, Schaeuble said that Greece “is a special case,”
and he urged that country’s finance minister to invite creditors to
Athens for talks so as to speed up implementation of decisions.

Ireland’s adjustment program, on the other hand, he said, was
“going according to plan” and that reports on the country were “very
positive.”

Schaeuble had particularly warm words for new Italian Prime
Minister Mario Monti, who participated in the meeting in his capacity as
finance minister. Schaeuble described Monti as “convincing” and
“trustworthy” in his presentation to colleagues.

Monti, according to Schaeuble, believes that economic reform is
necessary not for the sake of Europe, Brussels or Germany, but rather
“so that Italy has a still better future.” For that reason, Monti
told the group that he planned to announce in Italy, rather than
Brussels, what steps the government planned to take, according to
Schaeuble.

Asked if Italy was negotiating with the IMF about some form of fund
involvement in helping Italy deal with its problems, Schaeuble said that
“if there were negotiations I would have to know.” As for whether there
are simply talks not yet at the level of actual negotiations, he said.
“I cannot judge.”

Spanish Finance Minister Elena Salgado reinforced the confidence of
colleagues that Spain is on “the correct path,” Schaeuble reported.

Schaeuble declined to comment on the announcements of special
measures taken in concert earlier today by the world’s major central
banks, saying that “the German finance minister never comments on
central bank decisions.”

He rejected media reports that major Eurozone countries were
getting involved in the decision of who has which portfolio on the ECB’s
Executive Board. “It is a matter for the ECB” to decide, he said. “We
know this.”

France and Germany have some leadership responsibility in Europe,
he said, although “naturally Italy is a big, important country,” as are
others.

Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

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