HIGHLIGHTS-Comments from euro zone finance ministers

BRUSSELS Mon Feb 11, 2013 2:52pm EST

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BRUSSELS Feb 11 (Reuters) - Cyprus's finance minister drew no clear support from his euro zone peers on Monday for his refusal to impose losses on bank depositors as part of the country's bailout programme.

French Finance Minister Pierre Moscovici said after the Eurogroup meeting that no measures should be ruled out to stabilise exchange rates, calling for action to counter volatility in the euro.

Following are comments following a meeting of euro zone finance ministers:

FRENCH FINANCE MINISTER PIERRE MOSCOVICI

"It seems important to me that a currency should reflect economic fundamentals. It's up to the market to do it... If markets function well then it should be possible for an exchange rate to reflect the fundamentals of the economy. We are going to be careful to eliminate exchange rate volatility."

"This is not about, to be clear, calling for pressure on the European Central Bank, or I don't know what intervention or pushing for a currency war."

"We really have to take strong action at the international level for stability and then all instruments can be used but in a coordinated manner."

GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE

"We reassured each other that we'd stick to the line on exchange rate questions that we've always had internationally, that we agreed at G20 and G7 levels, that exchange rates should not be manipulated, that too high flexibility is of course dangerous ... We will urge at the G20 meeting in Moscow that (that is agreed also) in the G20 framework."

"The exchange rate problems don't just exist in and with the euro but there are concerns with other big currencies."

SCHAEUBLE (on Cyprus)

"First of all we need the elections in Cyprus ... We said clearly one more time that Cyprus needs to use an independent institution to reliably document the implementation of money laundering standards. That's a central point."

"If we ever do talk about a programme, then more must be reached on the question of money laundering. There is no need to decide yet. That may show in March."

SCHAEUBLE (on ESM bank recapitalisation)

"All were in agreement that the ESM was primarily created to be a rescue mechanism that should stabilise the confidence of financial markets in the common currency. The ESM is primarily there in order not to be used, but to create confidence and for that it needs a certain level of lending capacity."

"Therefore what can be used for banking capitalisation is limited anyway, especially as we know that the funds used for banking recapitalisation must be backed by more capital because the rating agencies have pointed that out."

"We all agree it's primarily about the tax payer not taking the risks of the banks in the step-by-step division of the risks of the states from those of the financial sector."

EUROGROUP CHAIR JEROEN DIJSSELBLOEM (On currency)

"It was part of our discussion."

"The main conclusion was it should be discussed in the G20 this weekend."

DIJSSELBLOEM (On Cyprus)

"Tonight where Cyprus is concerned we zoomed in on the issue of anti-money laundering and didn't go into any possible, or not possible, elements of a programme so I can't go into these elements with you."

DIJSSELBLOEM (On Cyprus anti-money laundering measures)

"We agreed that an independent assessment conducted by a private sector firm is required and we requested the Troika and Cyprus to agree on the terms of reference for such an assessment within a week."

DIJSSELBLOEM (on ESM direct recapitalisation)

"On the capacity issue, in order to preserve the ESM capacity for other instruments and the ESM high credit rating, we agreed to explore the possiblity of defining limits for the various ESM instruments. We agreed that the ESM should strive to maximize efficiency and provide the highest capacity for direct recapitalisation without putting additional strain on national budgets."

"In particular, we agreed to explore options where private capital could be attracted alongside the ESM capital injections in order to maximize the direct recap capacity."

"We will continue to discuss other important issues related to the direct recap instrument at our next meetings and aim to finalise the operational framework by June."

DIJSSELBLOEM (on Ireland)

"We will discuss at our next meeting in March how best to support Ireland as well as Portugal in successfully exiting its programme and fully returning to market financing."

Earlier comments by ministers arriving at the meeting.

CYPRUS FINANCE MINISTER VASSOS SHIARLY

"I would say that the bail-in of depositors is a grossly exaggerated possibility, unlikely to happen, we will not accept it under any circumstances and I don't think it creates any way forward."

"At the last meeting we have agreed there would be an MOU (memorandum of understanding) in March after the elections. We have managed to maintain a stable position in Cyprus, we have not requested any financial sasistance from anybody, we are maintaining the fiscal as well as the borrowing needs of the country without any external assistance, we will continue to do so and I believe with the Eurogroup we will be able to find a solution and a programme by the end of March."

LUXEMBOURG FINANCE MINISTER LUC FRIEDEN (On the euro)

"I find the question extremely interesting since a year ago, everyone was asking, at least people in Brussels, if the euro was going to survive. I note that today that certain people find the euro too strong. So it is the best sign that the euro exists, that the euro will survive, that the euro is a stable currency ... I am very glad that we have stabilised the euro ... (The euro's exchange rate) "doesn't worry me excessively."

AUSTRIAN FINANCE MINISTER MARIA FEKTER (on euro strength)

"This is mainly decided by the market ... I find an artificial weakening unnecessary. We are in a good way now. In my view the excitement about the euro is unjustified right now." (Reporting by Adrian Croft, Claire Davenport; Jan Strupczewski, Barbara Lewis, Leigh Thomas, Annika Breidthardt)

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