LONDON (Dow Jones)--The euro zone's debt crisis isn't over and discipline needs to be maintained to stop it spreading further, according to German Finance Minister Wolfgang Schaeuble.
In a letter to party comrades in the Bundestag, seen by Dow Jones Newswires, Schaeuble warned "it would be a mistake to think that the crisis of trust in the euro area can be solved by a single summit," although he argued that last week's decisions by heads of government were "an important step towards overcoming the Greek crisis and the preservation of financial stability."
Without mentioning them by name, Schaeuble spelled out to his colleagues that the situations of Italy and Spain were different from Greece's, and warned them against casting doubt on their ability to get on top of their problems.
"In the present mood, dominated by fears of contagion, it is even more important not to let doubts about the seriousness of consolidation efforts arise in the first place," Schaeuble said. "The financial situation in some countries that are now in (the market's) focus, is in itself no cause for serious concern."
Schaeuble's comments ended the period of relative calm in Europe's debt markets since last week's summit. The yield spread between Italian 10-year bonds and benchmark German bunds widened 23 basis points to 310 basis points as Italian 10-year bond yields rose to 5.794%, according to Tradeweb. The 10-year Spanish-German yield spread widened 20 basis points to 339 basis points. 10-year Spanish bonds were yielding 6.079%.
Schaeuble repeated that Greece "was and is the origin of this crisis in trust," and argued that the decisions taken last week would help reduce its debt load to a sustainable level, and promote growth.
German politicians and economists have criticized the enhanced bail-out plan for Greece, sealed last week, as another big step towards a "Transfer Union", under which Germany will be saddled with the debts of its neighbors.
In particular, there has been protest at the expansion of the role of the European Financial Stability Fund, which will now be allowed to buy the bonds of troubled countries in the open market.
Schaeuble acknowledged in his letter that "the way we have chosen is certainly not without risks, but the risks of the conceivable alternatives are larger."
He said Germany will not write "any blank checks" for the EFSF, but reminded his colleagues that the measures taken by the ECB to support bond markets over the last year can only be temporary.
He stressed that Germany's well-being depended on the economic and political integration of Europe, and that the country cannot afford a break-up of the euro zone.
Source: http://online.wsj.com
In a letter to party comrades in the Bundestag, seen by Dow Jones Newswires, Schaeuble warned "it would be a mistake to think that the crisis of trust in the euro area can be solved by a single summit," although he argued that last week's decisions by heads of government were "an important step towards overcoming the Greek crisis and the preservation of financial stability."
Without mentioning them by name, Schaeuble spelled out to his colleagues that the situations of Italy and Spain were different from Greece's, and warned them against casting doubt on their ability to get on top of their problems.
"In the present mood, dominated by fears of contagion, it is even more important not to let doubts about the seriousness of consolidation efforts arise in the first place," Schaeuble said. "The financial situation in some countries that are now in (the market's) focus, is in itself no cause for serious concern."
Schaeuble's comments ended the period of relative calm in Europe's debt markets since last week's summit. The yield spread between Italian 10-year bonds and benchmark German bunds widened 23 basis points to 310 basis points as Italian 10-year bond yields rose to 5.794%, according to Tradeweb. The 10-year Spanish-German yield spread widened 20 basis points to 339 basis points. 10-year Spanish bonds were yielding 6.079%.
Schaeuble repeated that Greece "was and is the origin of this crisis in trust," and argued that the decisions taken last week would help reduce its debt load to a sustainable level, and promote growth.
German politicians and economists have criticized the enhanced bail-out plan for Greece, sealed last week, as another big step towards a "Transfer Union", under which Germany will be saddled with the debts of its neighbors.
In particular, there has been protest at the expansion of the role of the European Financial Stability Fund, which will now be allowed to buy the bonds of troubled countries in the open market.
Schaeuble acknowledged in his letter that "the way we have chosen is certainly not without risks, but the risks of the conceivable alternatives are larger."
He said Germany will not write "any blank checks" for the EFSF, but reminded his colleagues that the measures taken by the ECB to support bond markets over the last year can only be temporary.
He stressed that Germany's well-being depended on the economic and political integration of Europe, and that the country cannot afford a break-up of the euro zone.
Source: http://online.wsj.com
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