BERLIN (MNI) – German Finance Minister Wolfgang Schaeuble observed
Thursday that markets are regaining confidence in the financial
situation of Eurozone members, but said further state guarantees for
German banks are needed to stem the spread of the debt crisis.
Speaking in the lower house of Parliament, Schaeuble predicted that
the E400 billion “safety net” for six large German banks would “not be
necessary” to allow them to meet higher capital targets by mid-year, but
he said a law was needed in case they fell short.
“This law will probably not even be used,” he said. “It appears
that German banks will make it.”
Nevertheless, the draft law constitutes “one element in the
stabilization of the single currency” and thus a “contribution” to
restoring confidence in the Eurozone, he said.
“We are not out of the woods yet,” the minister cautioned. But “I
do know that financial markets are beginning to regain confidence. I do
know that we are on the right path.”
Schaeuble reiterated that the debt crisis could be overcome only by
attacking its “root causes” — namely the financial situations of
Eurozone member states and competitiveness of their economies. He cited
the reform measures launched by Italian Prime Minister Mario Monti as a
positive example.
The draft law would assure that a public backstop is available
through the end of this year for system-relevant banks that are unable
to meet the new capital requirements laid down at the EU level.
Schaeuble declined to estimate how much the bailout of wobbly
German banks had already cost. He suggested any additional burden could
be covered by the government, given the reduction in new borrowing last
year to less than E20 billion.
[TOPICS: M$G$$$,M$$CR$,MGX$$$,M$X$$$]
