French Economy Minister opposes Merkel, insisting the euro is not in danger

France’s Economy Minister Christine Lagarde has rebuffed German Chancellor Angela Merkel’s warnings over the fragility of the euro by insisting the currency is not in danger. 

Reuters

Germany’s clampdown on short-selling sparked a new fall for the euro on Wednesday when it fell to it lowest level against the dollar in four years. Lagarde insists this fall was no reason for concern.

“I absolutely do not believe that the euro is in danger,” Lagarde told RTL Radio. “There’s a margin for fluctuation, but what we see over the long term is the credibility of a currency and the euro is a credible currency,” she said.

Distancing herself from Merkel’s warnings, Lagarde said France would not follow Germany’s unilateral ban on short-selling certain stocks and bonds.

German traders have been prohibited from the naked short-selling of a range of eurozone sovereign stocks and bonds. In a naked short-sell, a trader sells stock he does not own yet, then buys or borrows it at a lower rate before he has to part with it, thus pocketing the difference, which has a detrimental effect on the currencies concerned.

Lagarde said France would not follow Germany’s ban on the sovereign bonds at the centre of Europe’s fiscal troubles, adding that Berlin’s independent decision should have been brought into concert with the country’s European partners. This endorses the European Commission’s view that consultation at the international level would have been preferred.