Tags: ECB | Weber | Woes | Euro

ECB's Weber: Economic Woes Won't Hurt Euro

By Dan Weil   |   Wednesday, 03 Feb 2010 02:11 PM

While several euro zone members face serious economic woes, the euro isn’t in danger, says Axel Weber, a member of the European Central Bank’s governing council.

"There is no problem of credibility of the euro over the last 10 years," Weber told CNBC.

"At the core, this is a healthy economy, and there is no problem with the currency whatsoever. I expect the euro to be there forever."

Greece, Ireland, Portugal and Spain face massive budget deficits and sluggish economies, raising fears of a European sovereign debt crisis.

Weber says the ECB will start removing some of the stimulus measures it implemented to pull European economies out of recession, even though that reversal may hurt the weaker countries.

"It is the normalization of our liquidity framework,” he said.

“We cannot take in our decisions developments in certain parts of the union, because we do not have tools for that."

But given the weakness of many European economies, fiscal and monetary stimulus should be withdrawn only slowly, he says.

Not everyone is as confident about the euro’s strength as Weber.

“Down the line, not this year or two years from now, we could have a breakup of the monetary union,” superstar economist Nouriel Roubini told Bloomberg.

“The euro zone could drift essentially to a bifurcation, with a strong center and a weaker periphery. Eventually some countries might exit the monetary union. This is the very first test.”

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While several euro zone members face serious economic woes, the euro isn t in danger, says Axel Weber, a member of the European Central Bank s governing council. There is no problem of credibility of the euro over the last 10 years, Weber told CNBC. At the core, this...
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