Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit.
German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” Steffen Seibert, Merkel’s chief spokesman, said at a briefing in Berlin today. The search for an end to the crisis “surely extends well into next year.”
Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of an emerging plan to avoid a Greek default, bolster banks and curb contagion. They set the Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.
On the summit agenda is how any recapitalization of Europe’s banks “might be carried out in a coordinated way” and how to make the European Financial Stability Facility, the EU’s rescue fund for indebted states, as effective as possible, Seibert said. The leaders will also discuss ways to tighten economic and financial policy, he said.
The euro retreated from a one-month high against the dollar after Seibert’s comments, following last week’s biggest gain in more than two years on speculation that European policy makers are stepping up efforts to stop the crisis. German 10-year bonds rallied and the Stoxx Europe 600 Index pared an advance of as much as 1.5 percent and was up 0.3 percent at 12:47 p.m. in Frankfurt.
While European leaders gave themselves one week to settle differences and flesh out a strategy to stop the sovereign debt crisis, global finance chiefs warned that failure to do so would threaten the world economy.
“The risk of a recession would be increased dramatically were the Europeans to fail to accomplish goals that they’ve set for themselves,” Canadian Finance Minister Jim Flaherty said after the G-20 meeting, which ended Oct. 15.
Two years to the week since Greece triggered the turmoil by revising its budget math, the inability of policy makers to stamp it out has pushed the Greek government to the edge of default and the European economy close to recession.
As the head of Europe’s biggest economy and the biggest contributor to bailouts for Greece, Ireland and Portugal, Merkel holds the key to resolving the crisis now focused on the strength of Europe’s banks.
Leaders won’t present a “definitive solution” for the euro region’s debt crisis at the summit in Brussels, Reuters cited German Finance Minister Wolfgang Schaeuble as saying.
Euro members will seek to agree on five elements of a plan to solve the region’s woes, including a debt reduction for Greece, Reuters cited Schaeuble as saying in a speech at a tax advisers’ conference in Dusseldorf.