Germany's Schaeuble says debt reduction is global task

Fri Nov 2, 2012 5:05am EDT
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By Gernot Heller

BERLIN (Reuters) - The United States and Japan must share responsibility with Europe for ensuring global economic stability, German Finance Minister Wolfgang Schaeuble said, signaling that a G20 meeting this weekend should not focus solely on the euro zone crisis.

Speaking in an interview before finance ministers and central bankers from the Group of 20 nations meet in Mexico, he said top economies must pursue structural reforms and fiscal consolidation to win back market trust and build sustainable growth.

Schaeuble also said in emailed answers to questions submitted by Reuters that he saw no danger of delay in the introduction of Basel III rules on banking capital that are due to be phased in from January.

Schaeuble does not want the two-day G20 meeting in Mexico City to concentrate exclusively on the euro zone crisis to the detriment of other urgent issues such as the "fiscal cliff" facing the United States and Japan's debt problems.

"The United States and Japan bear as great a responsibility for (ensuring stability) as we Europeans," he said.

"The G20 economies must decisively win back confidence with structural reforms and sustainable financial policies. This is the most important precondition for strengthening global economic conditions," Schaeuble said.

"Without consolidation and reforms we risk further loss of confidence and still less growth. No sustainable growth can be built on a mountain of debt," said the minister, known for his advocacy of fiscal rigor even in times of recession.

In the United States, existing legislation will raise taxes and cut spending to the tune of about $600 billion in 2013 unless lawmakers take action. However, Republicans and Democrats have yet to agree on measures to avoid this "fiscal cliff", which could cause the economy to contract.   Continued...

German Finance Minister Wolfgang Schaeuble speaks during a news conference about the federal tax assessment for 2012 at the finance ministry in Berlin, October 31, 2012. REUTERS/Thomas Peter