UPDATE 1-ECB's Weidmann: France's budget policies 'test case' for euro fiscal rules

Mon Apr 7, 2014 5:37pm EDT

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AMSTERDAM, April 7 (Reuters) - The president of the German central bank warned on Monday that the credibility of the euro zone's budgetary rules was at stake and that France's suggestion that the bloc's budget deficit targets be weakened are a "test case" for the rules.

"It's vital that we stick to these rules, because the credibility of these rules is at stake," Bundesbank President Jens Weidmann told Dutch public television late on Monday.

"A currency union needs its members to aim for stability... Part of that is having an orderly budget and part of that is sticking to agreements," added Weidmann, who is also a member of the European Central Bank's board.

France's new Finance Minister Michel Sapin said last week the country would seek a review of its deadline for meeting the European Union's budget deficit ceiling of 3 percent.

"France is a test case for the credibility of these new rules," Weidmann said, echoing other senior European officials including Economic and Monetary Affairs Commissioner Olli Rehn, who told Reuters last week there were no grounds for giving France an extension.

Speaking alongside his German counterpart Wolfgang Schaeuble in Berlin on Monday, Sapin said any measures to cut the French public deficit would come from growth and savings, and promised "tough, brave" decisions on the economy. (Reporting by Thomas Escritt; Editing by Eric Walsh and Lisa Shumaker)

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