European Central Bank Governing Council member Klaas Knot said Germany is standing in the way of creating a bigger bailout fund, and that the Netherlands will work to convince German officials to loosen the purse strings to create a larger emergency fund.
Bloomberg reported that Knot made the statement on Dutch television Thursday evening, saying, “The most important obstacle lies in Germany, not in the Netherlands. I think that more money is needed and we will use the time to convince our German colleagues.”
Germany has been focused on austerity measures and urging nations to adhere to their budgets as a means of combating the eurozone crisis, as Chancellor Angela Merkel (left) has resisted all calls to boost the rescue fund amid warnings that its present size is inadequate to cope with the scope of the crisis, which has now entered its third year.
Knot, who succeeded Nout Wellink in July at the Dutch central bank, said, “We haven’t moved in the right direction and it’s also clear that measures needed are happening too slowly and too limited in size. A significant acceleration in decision-making is needed.”
That doesn’t seem likely to happen, however, as two Merkel-allied German officials said Thursday that the country remains opposed to increasing the amount of the rescue fund. The permanent European Stability Mechanism (ESM), currently set at a ceiling of 500 billion euros ($640 billion), is scheduled to go into effect later in 2012.
In another area, Knot said he is not concerned about the euro’s depreciation against the dollar. He was quoted saying, “It’s part of the normal exchange rate fluctuation; even in historic perspective, the euro is remarkably stable even compared to other currencies.”