Germany Warns of Euro Failure, EU Calls for Unity

Germany Warns of Euro Failure, EU Calls for Unity
# 19 May 2010 23:20 (UTC +04:00)
Baku – APA. German Chancellor Angela Merkel is warning the future of Europe is at risk, and says Germany is prepared to act alone to stop financial problems from spreading, APA reports quoting “The Voice of America”.

Ms. Merkel issued the warning during a speech to the German lower house of parliament, the Bundestag, Wednesday, telling lawmakers that "if the euro fails, then Europe fails."

She also said that Germany is prepared to curb what she called "destructive" behavior by financial markets.

Her comments come one day after Germany banned a risky type of financial transaction that some economists have blamed for helping to spark the global financial crisis, causing concern among some European Union officials.

EU Internal Market Commissioner Michel Barnier warned Wednesday that unilateral actions could cause additional problems, and called for discussions at a meeting already scheduled for later this week. French Finance Minister Christine Lagarde also said Germany should have consulted other EU members first.

Germany is Europe’s largest economy and had become increasingly concerned that financial troubles in debt-ridden Greece could spark a new financial crisis.

Greece officials Wednesday said they used the first installment of a nearly $1-trillion EU-International Monetary Fund bailout to pay back about $11 billion in debt.

Germany’s parliament is scheduled to vote on its share of the bailout, about $157 billion on Friday.

Meanwhile, German officials have grown increasingly worried that some investors are trying to profit from the troubles facing Greece and potentially other European countries by engaging in complicated and risky behavior.

On Tuesday, German regulators banned a type of risky trading strategy known as "naked short selling," which involves eurozone government debt and shares of major financial companies.

Investors engaging in naked short selling try to make money by selling an asset they do not own at one price, in the hopes of buying that asset later at a lower price. If it works, the investor profits on the difference.

Some economists blame investment strategies like naked short selling for helping to plunge the world into a financial crisis.

German Chancellor Angela Merkel on Wednesday warned that such practices would continue to endanger the EU and called for a "new stability culture."