Chancellor Angela Merkel said that Germany and the Netherlands are working "closely" on drafting a permanent crisis-resolution mechanism, as the Dutch government backed her demand to make private investors shoulder more risk.
Dr Merkel, speaking to reporters in Berlin today after talks with Dutch prime minister Mark Rutte, said that Germany and the Netherlands cooperated well during the financial and economic crisis, through the Greek turmoil and subsequent action taken in May to set up a euro rescue fund. They are working equally closely on the mechanism for indebted euro-area countries to come into effect from 2013, she said.
In the mechanism being drafted for a December summit of European Union leaders, "what's important for us is that it will involve treaty changes and we'll support that," Ms Rutte said at the same briefing. "What's important is that IMF and private investors are involved."
The German Chancellor last week refused to back down from her push to force private investors to share the burden of the euro debt crisis, which helped send Irish borrowing costs to record levels.
Speaking at the G20 summit, Dr Merkel acknowledged her demands upset the markets but insisted it was unfair for taxpayers to be saddled alone with the cost of sovereign rescues. "Let me put it simply: in this regard there may be a contradiction between the interests of the financial world and the interests of the political world," she said.
"We cannot keep constantly explaining to our voters and our citizens why the taxpayer should bear the cost of certain risks and not those people who have earned a lot of money from taking those risks."
Additional reporting: Bloomberg