Germany 'committed' to saving euro
German chancellor Angela Merkel backed the European Central Bank's insistence on conditions for helping reduce borrowing costs in indebted countries, saying Germany is "in line" with the ECB's approach to defending the euro.
"Obviously time is pressing" on stamping out the debt crisis, though "on many of these issues we feel we're on the right track," Ms Merkel told reporters in Ottawa yesterday at a joint press conference with Canadian prime minister Stephen Harper. Euro-area policy makers "feel committed to do everything we can to maintain the common currency."
Asked about ECB chief Mario Draghi's announcement that the central bank may return to sovereign bond-buying, Ms Merkel said recent ECB decisions "have made it clear that the European Central Bank is counting on political action in the form of conditionality as the precondition for a positive development of the euro."
Ms Merkel, facing European pressure to ease bailout terms and allow shared debt as well as calls by global partners to stop contagion, returned to the crisis fight after her summer vacation, using the trip to Canada to make her first public comments on the turmoil in a month.
She hailed Canada's budget and debt discipline as a model for the 17-nation euro area.
Mr Draghi said on August 2 that the ECB might buy government bonds to help lower borrowing costs in countries such as Spain and Italy, though only in return for strict conditions and if governments act first by buying debt through Europe's bailout funds. Spain and Italy have yet to say whether they will request aid.
"It is becoming clear that the ECB purchases have to be conditional on the implementation of austerity and structural reform measures in that country," Citigroup global markets analysts led by Juergen Michels said in a note to clients.