German chancellor Angela Merkel said today a possible new fund to support euro zone countries that run into financial problems would not weaken European Union rules on budget discipline.
Speaking after a meeting with Luxembourg prime minister Jean-Claude Juncker, she said any European monetary fund that emerges from discussions should be seen as a last resort and Mr Juncker said it would not be a solution for Greece's problems.
Ms Merkel, however, noted positive developments in Greece, saying its recent bond issue was successful, even if the country had a long way to go to overcome its budget deficit and debt problems. The country did not need support, she said.
"In my assessment, Greece does not need any financial support," Ms Merkel told journalists. "Greece has won some trust back through the steps taken by its government. I see the development relatively positively and that was demonstrated by the placement of the Greek bond, which was substantially oversubscribed."
Mr Juncker echoed those sentiments, saying Greece's latest austerity plan, which involves deep cuts to public sector wages and new taxes, should be enough to convince financial markets that the country can emerge from its problems.
At the same time, he said everything possible needed to be done to prevent speculation against Greece and its debt market.
"I am strongly convinced that Greece will not require help," Juncker said. "The Greek government's programme will be strong enough to eliminate any element of irrational behaviour in financial markets.
Reuters