Osborne Warns on Greek Euro Exit, Suggests Deposit Cover
“The worst thing for the world would be a Greek exit without a plan to deal with the contagion, because that would be like letting Lehman Brothers go and not having a plan for the day after,” Osborne said in excerpts of a CBS Evening News interview scheduled for broadcast this evening. The 2008 collapse of Lehman Brothers Holdings Inc. deepened the global financial crisis.
Osborne spoke two days before Greek voters go to the polls in an election that may decide whether the nation leaves the 17- nation euro area. A Group of 20 summit in Mexico next week will give European leaders a chance to discuss the crisis with heads of other major economies, including U.S. President Barack Obama.
European leaders are considering ways to strengthen the monetary union and share risks as they seek to restore the health of the financial system. Among the proposals are a facility that can take direct stakes in banks, to be followed later by a single resolution authority for the 17-country monetary union and a single deposit-insurance fund.
“We need to have some confidence that bank depositors in Spain and other countries have their deposits protected by the rest of the euro zone,” Osborne said, according to the advance excerpts of the interview.
Osborne said if the euro zone has a single currency, it needs to have common debt, and he said these proposals were all about moving in the direction of a “political union.”
“Whilst they dither and delay in getting to that point, the U.S. is suffering,” Osborne said. “The U.K. is suffering. The rest of the world is suffering. And, of course, the peoples of Spain and Greece and all these other countries are suffering, too.”
German Chancellor Angela Merkel today rejected calls for a deposit-insurance fund and said she opposes “premature” proposals for pooling debt to stem the euro area’s financial crisis.
“Germany will not be persuaded of all those quick solutions such as euro bonds, stability bonds, a European deposit-insurance fund,” Merkel said in a speech to a small- business group in Berlin.
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