Germany's Schaeuble: ESM could turn into European monetary fund

WASHINGTON (Reuters) - German Finance Minister Wolfgang Schaeuble said on Thursday it would be possible to develop the euro zone’s European Stability Mechanism (ESM) rescue fund into a European monetary fund soon.

Asked if this would be possible in the short term, Schaeuble replied: “Yes, I think so.”

Speaking on the sidelines of International Monetary Fund meetings in Washington, he also said any new aid programs for euro zone countries should be without the international lender and so under European auspices.

He added that it was not realistic to take further steps towards European Union integration at this point and that after Britain’s vote to leave the bloc its remaining members must be ready to form “coalitions of the willing”.

“Given the current situation, it is not realistic to think that we can take further steps towards deepening European integration at the moment,” Schaeuble said.

“We need to respond to urgent questions in a way that is visibly European, and we need to find European solutions to acute problems,” he added. “We need flexible speeds, variable groupings of countries, ‘coalitions of the willing’, whatever you want to call it in a particular situation.”

German officials have said Schaeuble and his delegation will stress the importance of globalization and free trade for growth at G20 talks in Washington this week, as well as the need for reforms to increase resilience against future shocks.

Officials from the group of the world’s 20 biggest economies are meeting on the sidelines of the bi-annual conference of the IMF and the World Bank in Washington, which is from Thursday until Sunday.

Schaeuble said central banks had done plenty to support economies.

“There is no lack of debt in the world, and no lack of central bank liquidity,” he said. “There is, however, a lack of productivity and competitiveness in many countries because the necessary reforms have not been carried out.”

Reporting by Gernot Heller; Writing by Madeline Chambers; Editing by Joseph Nasr and Catherine Evans