German Chancellor Angela Merkel said on Saturday any measure to stabilize the euro should come within a complete strategic package, dampening hopes for a quick decision on moves to tackle the euro zone debt crisis.
Germany faces mounting pressure from the European Commission and its euro zone partners to strengthen a rescue fund for troubled member states, the European Financial Stability Facility (EFSF).
If the discussion is about a further package of measures, it is above all important that we develop a complete strategy that must absolutely include closer economic coordination, Merkel told a news conference in Mainz after a meeting with other senior members of her ruling Christian Democrats.
You cannot simply raise another particular aspect each day, she added.
Berlin insists it sees no need to commit more funds to the 440 billion euro ($591.7 billion) EFSF, which has so far been tapped only by Ireland. Instead, the German government is open to a discussion about way to enable the existing fund to be used in full.
Senior European sources told Reuters, however, that the sense of urgency in Berlin for boosting the fund had diminished after successful bond auctions this week in Spain and Portugal, the two countries seen most at risk of a bailout following rescues of Greece and Ireland last year.
Instead Germany is pushing for broader anti-crisis measures to be agreed at a summit of European Union leaders in March.
EFSF AND SCHAEUBLE
Only around 250 billion euros of the 440 billion euro fund are effectively available to euro zone countries because of a complex loan guarantee system. That would probably not be enough in the event bailouts are needed of both Portugal and Spain.
Given the mechanics of the rescue fund, this sum cannot be fully utilized in the form of credit, because a certain amount of capital reserves need to be built up to maintain the AAA rating that is necessary for favorable financing, German Finance Minister Wolfgang Schaeuble was cited as saying in the Frankfurter Allgemeine Sonntagszeitung.
We have to and will solve this problem, he said.
This sentiment was echoed in an international European Commission paper, according to another media report on Saturday.
The finances available within the EFSF must be raised to at least 440 billion euros, the paper read, as cited by Der Spiegel. Member states are ready to reconsider the size of the EFSF, whenever this is necessary.
Schaeuble said he did not expect Portugal, Spain, Italy and Belgium to need to draw upon the rescue fund.
No one is rushing to ask for aid from the fund, because this also means strict conditions for national budgetary and financial policy, he said.
Schaeuble said he expected budgetary policy and taxes to remain for a long time, a matter for member states rather than a common European economic policy.
Der Spiegel reported, however, that the European Commission expected the euro zone crisis to worsen in the first few months of this year.
New and heightened tensions seem to be unavoidable in the early months of 2011, it cited the EC paper as saying..
(Additional reporting and writing by Sarah Marsh)