Germany insists the eurozone can withstand Greece exit from blocCatherine Kinney (Author) Published Date : Jan 05, 2015 08:00 ET
Greece has been facing pressures from nations within the eurozone, notably Germany, to honor the terms of its international bailout agreement; and while Syriza, the leading anti-austerity party in Greece promises to renegotiate the terms of its bailout, Germany vows that the eurozone can withstand the exit if Greece ever decides to pull out from the bloc.
Georg Streiter, spokesman for the Chancellor of Germany, Angela Merkel, had announced that Berlin looks forward to Greece upholding the terms of its international bailout agreement, but fell short of stating that his government believed the eurozone could withstand Greece s exit from the bloc.
According to Streiter, Greece has fulfilled its obligations in the past. The German government assumes it will continue to fulfil its contractual obligations to the troika. Every new government has to abide by the contractual obligations of the previous government.
Voters in Greece will be going to the polls by January 25, and survey polls suggest the anti-austerity party Syriza headed by Alexis Tsipras might win the elections; and this assurance has led the party to pledge reversing reforms imposed by Greece s international creditors, and to renegotiate its bailout deal.
Based on its bailout deal the European Union, the International Monetary Fund, and the European Central Bank which make up the Troika, has pledged to support Greece with 240 billion or 188 billion if the country would come up with workable budget cuts and economic reforms.
It is believed that Germany s Chancellor Merkel and her finance minister, Wolfgang Schaeuble, are of the economic convictions that Portugal and Ireland, which were experiencing economic woes at a time in the past, have now made considerable progress in strengthening their economies, and this spells a good time for nations within the eurozone.
In a related development, the euro s value fell to a nine-year low, and since financial regulators are of the opinion that the political instability in Greece among other factors is to blame, the European Central Bank might be forced to stipulate some quantitative easing to counter the development.
The euro slumped to $1.18605 the weakest level since March 2006 and the ECB may respond with bond-buying options as happened with the UK, US, and Japanese banks.
Germany insists the eurozone can withstand Greece exit from bloc