ECB's Kranjec says euro will survive despite problems

By @ibtimes on

Problems with the euro are being solved, and the single currency will survive, a member of the European Central Bank Governing Council, Marko Kranjec, said on Thursday.

I am sure that the euro will survive ... that is in the interest of the European Union and all euro zone members, Kranjec, who is also the governor of the Slovenian central bank, said in a midnight debate on TV Slovenia.

I see no danger for existence of the euro although there are problems there, but they are being solved, he said.

The most difficult questions have been solved amid the case of Ireland and here the European Union showed a lot of flexibility, he added, saying he expected the EU to reach an agreement on fiscal harmonization, as well.

Slovenia's minister of development and European affairs, Mitja Gaspari, in the same debate sounded a much less optimistic note and indicated an unwillingness by Slovenia to help on any future bailouts of indebted euro zone members.

Europe is entering the coming year amid extremely uncertain conditions. ... After what has been happening in the second half of this year we see there is no answer to the financial crisis in Europe, said Gaspari.

There are attempts to solve the problems case by case and we still do not know whether those attempts work, said Gaspari, who was a member of the European Central Bank governing council in 2007.

He also said the patience of euro zone members which have to finance fellow euro members is running out after the euro zone ensured additional financing to indebted Greece and Ireland over the past months.

I have to say directly that in Slovenia we will probably find it difficult to sustain saving another country in the euro zone that may come with a demand for additional financing, Gaspari said.

Slovenia was badly hit by the global crisis due to its dependency on exports and its budget deficit soared to 5.8 percent in 2009 from 1.8 percent a year before amid lower tax income and high government spending on measures to ease the impact of the global crisis on the economy.

Slovenia, which adopted the euro in 2007, expects growth of about 1 percent this year after its economy shrank by 8.1 percent in 2009.

Standard & Poor's on Wednesday revised its outlook on Slovenia's sovereign foreign currency credit to negative from stable, citing concerns that Slovenia lacks structural measures aimed at reducing the government deficit.

(Reporting by Marja Novak; Editing by Leslie Adler)

Join the Discussion