German Chancellor Angela Merkel said yesterday the euro was a “stable currency” but, in a veiled dig at Greece and other shaky economies, said some eurozone members must sharpen their competitiveness and fiscal rectitude.
The leader of Europe’s largest economy also gave fulsome backing to Christine Lagarde in her bid for leadership of the IMF, saying the French Finance Minister was “ideal” for the job.
Ms Merkel told her audience the single European currency was not the root of Europe’s current travails.
“Let me tell you very clearly: we don’t have a problem with the euro as such,” Ms Merkel said at a forum in Singapore.
“It is a stable currency, particularly if you look at it vis-à-vis the dollar.”
But in an apparent reference to Greece and other eurozone members with debt problems, Ms Merkel said the eurozone region had “a competition problem, a competitiveness problem”.
“So this is why we have said right from the start we need to boost competitiveness and we need to put fiscal responsibility and fiscal soundness at the very heart of our efforts,” Ms Merkel said.
Improving economic competitiveness is key to overcoming the challenge facing the eurozone’s 17 members, Ms Merkel said.
“Because the competitiveness of the member states in the euro area is too disparate, some of them are too weak as regards their competitive situation and the question is obviously how can we overcome this crisis,” she said.
The shared currency means countries within the eurozone have to boost their collective competitiveness if they are to stand any chance of competing with Asia, she said.
“A common currency actually requires also that competitiveness is not as unequal as it is now. There needs to be more cohesion and more convergence there,” said Ms Merkel.
“And we must not pin our hopes on achieving some kind of average but if we want to remain competitive with our Asian competitors the best among us and our strategic partners needs to be the benchmark for what we do and not sort of the average or the lowest common denominator.”
The common European currency has benefitted the German economy and Berlin remains committed to the euro, she said.
“Germany is well aware of the importance of the euro,” said Ms Merkel.
“We feel committed to the euro, we have benefitted quite a lot from the euro, after all, we are an exporting nation.”
Ms Merkel’s comments come amid growing expectations that the European Union will provide new aid to Greece as the eurozone struggles to fix its finances despite a €110 billion bailout agreed with Athens and the International Monetary Fund.
Support from Germany, the eurozone’s economic powerhouse, is vital in any further bailouts for its fiscally-strapped neighbour.
On the IMF leadership succession, Ms Merkel said Christine Lagarde was well qualified to head the body and urged emerging countries to give her an “objective” assessment amid calls for a non-European to lead the body for the first time.