Germans rebuff calls for ECB action after summit

Wed Dec 14, 2011 10:01am EST
 
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By Noah Barkin and Paul Carrel

BERLIN/FRANKFURT (Reuters) - Germany's chancellor and central banker urged Europe to stick to stricter budget discipline and forget about one-shot solutions after financial markets judged that another EU summit had failed to resolve the euro zone's debt crisis.

Chancellor Angela Merkel and Bundesbank chief Jens Weidmann, speaking separately, rebuffed pressure for the European Central Bank to intervene decisively to stop the crisis escalating.

Merkel told parliament on Wednesday it would take years, not weeks, to overcome the debt problems but Europe would emerge stronger "if we have the necessary patience and endurance, if we do not let reversals get us down, if we consistently move towards a fiscal and stability union".

"The German government has always made it clear that the European debt crisis is not to be solved with a single blow. There is no such single blow," she said.

Weidmann, an influential voice in the ECB, made clear his opposition to ramping up purchases of troubled euro zone states' debt, saying he was "no fan" of the existing limited bond-buying program and even its supporters were growing skeptical.

He also said the Bundesbank would only provide fresh funds for the International Monetary Fund to help fight the euro zone crisis if countries beyond Europe did so too.

The euro fell below $1.30 for the first time since January, stocks slid and Italy had to pay a euro era record yield to sell bonds as nervous investors awaited a possible credit rating downgrade for one or more euro zone countries.

Rome had to pay 6.47 percent to sell 3 billion euros of 5-year bonds, highlighting fierce market pressure ahead of a year in which Italy has a gross funding goal of 440 billion euros, starting in late January.   Continued...