22.08.2012
By Simon Miller
Outgoing Bank of England Monetary Policy Committee member Adam Posen has warned that it would not be in Germany's interest to to supervise a eurozone break-up.
With Greece doing the rounds to increase the timings of its austerity cuts amid calls for its exit from the monetary union, Posen said that Germany would be better served in restructuring the money owned to it by other eurozone countries.
Speaking to the BBC, Posen said: "It is in Germany's interest, its commercial interest and economic interest, not just its foreign policy idealistic interests, to really restructure the debt that other countries owe them."
He pointed out that it was the German government and German banks that allowed the now-troubled eurozone countries to buy German goods, adding that Germany had "been running a scheme and so just as everywhere around the world you want to restructure the debt, you can’t make it all on the borrower. Lenders have to take a hit."
Posen added that if the eurozone collapsed, "Germany's currency would shoot through the roof, Germany's trade relations would be disrupted, and Germany's banks would then be on the bailout list instead of poor people and other countries, forever".
The comments come as Greek prime minister Antonis Samaras called for some breathing room to get the economy going.
As Samaras meets eurogroup leader Jean-Claude Juncker today to press for a two-year extension to the austerity plan before heading to Berlin and Paris later this week, the prime minister told German daily Bild that the country did not need additional money.
Instead, Samaras added: "All we want is a little room to breathe, to get the economy going and to increase government revenues. More time does not automatically mean more money."
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