Germany should tap European Central Bank, critics say
Chancellor Angela Merkel at the Lower House of German parliament Bundestag in Berlin as lawmakers vote on legislation to expand the E.U.'s rescue fund.
Economist Mario Monti, Italy's Prime Minister to be, today began talks of forming a new parliament. Monti will have to find a way for big reforms to be passed through the interim government. Meanwhile, Greece has a new interim government already in place. And both countries - along with others across Europe - are trying to tackle big debt problems.
German chancellor Angela Merkel today called the crisis "maybe Europe's most difficult hours since World War II." Germany is the biggest economyin Europe, and it pays the most money in loans to those other troubled countries. But critics say the country could do more to help its neighbors in need. Listen to the interview with the BBC's Chris Morris in Berlin.
Steve Chiotakis: Italy's incoming prime minister Mario Monti today began talks of forming a new parliament. Greece's new government is already in place. And today, German Chancellor Angela Merkel called the debt crisis "maybe Europe's most difficult hours since World War II."
Germany's taking care of the lion's share of the debt problem, but critics say the country could do more to help its neighbors out.
The BBC's Chris Morris is in Berlin with more on that story. Hey Chris.
Chris Morris: Good morning.
Chiotakis: Help me understand here, because I thought Germany was helping other countries that have these debt problems with loans. What else could Germany be doing?
Morris: Well Germany's the richest country in Europe, so yeah, it pays the most money in loans. But what it isn't prepared to do is to allow the European Central Bank to lend money directly to governments, and to buy government debt. That's the Fed can do in the U.S.; -- it can buy American government debt; it's what the Bank of England does in Britain, which isn't in the euro. But for big historical reasons and for decades of German policy, that's not what the European Central Bank's meant to do. So Germany says, countries have got to get through this by promoting extreme austerity -- we can help you, but we can only help you so far.
Chiotakis: And why is Germany so reluctant to change its policy?
Morris: Partly because it's got this idea of German fiscal discipline. It thinks that countries that have broken the rules should be punished. There's also this great historical fear, which is buried deep in the German psyche, about what happened in the 1920s when hyperinflation appeared, when banks started to print money. And that hyperinflation in the 1920s, for many people in German minds, led to the creation of conditions, which led to Adolf Hitler. So it's got some very, very sensitive historical connotations. And so far there's no sign of Germany changing course on that critical issue, the idea that the European Central Bank could step in.
Chiotakis: Has there been pressure, Chris, from any other European country for it to change its course? Anybody step in to say, 'Hey, can you do something?'
Morris: Sure, sure there has. Right at the heart of the euro. The French thought that the European Central Bank should be the solution, and big countries which are in Europe and not in the euro like the U.K. are also saying, come on, we've got to let the bank step in because it is the one institution that does have license -- if you allow it to -- to simply print as much money as countries which are in trouble need. But at the moment, Germany's still effectively wielding a veto, so those other countries are reluctantly having to accept that. But I think behind the scenes, the pressure is still being put on.
Chiotakis: The BBC's Chris Morris joining us from Berlin. Chris, thank you very much.
Morris: Thank you.