German finance minister: Europe has long way to go

Sat Oct 29, 2011 1:19pm EDT
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BERLIN (Reuters) - Europe still has a long way to go to solve its crisis, German Finance Minister Wolfgang Schaeuble was cited as saying by a magazine, noting it was key Italy did its homework and implemented promised reforms.

Schaeuble said European leaders had made an important step forward at last week's summit but it was far from the last meeting on this matter.

"We still have to go a long way until we have solved all the problems," he told Spiegel magazine, in an interview to be published on Sunday. "But the chance we will be successful has grown since last week."

When asked if the euro zone's bailout fund would be sufficient to potentially rescue Italy, Schaeuble said the question was irrelevant and the country must simply do its homework and implement reforms to reduce its deficit and bolster economic growth.

Italy, the euro zone's third largest economy, is again at the center of the debt crisis, as fears grow that its borrowing costs could hit levels that overwhelm the capacity of the bloc to provide support amid chronic political instability in Rome.

"Italy has declared its openness to reforms, now it must implement them," Schaeuble said, noting the country needed structural reforms in the labor market and social security.

"Europe functions through actions and not through everyone reassuring one another that they are good people," he said, adding that if Italy did not do its homework the financial markets would react accordingly.

Italy's Prime Minister Silvio Berlusconi last Wednesday promised European partners reforms to spur its stagnant economy and cut its towering public debt, but has failed to convince markets made skeptical by his repeated failure to deliver reforms.