French President Nicolas Sarkozy passionately defended the euro against sceptics at the World Economic Forum on Thursday, saying he and German Chancellor Angela Merkel would never let the currency fail. Sarkozy spoke as financial executives attending the Davos gathering voiced cautious optimism that the eurozone's debt crisis could be resolved without contagion spreading to Spain or investors being forced to take unbearable losses.
-- Strengthening rescue fund seen as key to restoring confidence
-- J.P. Morgan: EU right to seek solution without restructuring
-- Some see rescheduling of Greek debt, but no big 'haircuts'
-- Greek PM says won't default or restructure debt
"To those who would bet against the euro, watch out for your money because we are fully determined to defend the euro," Sarkozy said in a keynote speech. "Mrs Merkel and I will never - do you hear me, never - let the euro fall." US Treasury Secretary Timothy Geithner, the European Union's top monetary official, Olli Rehn, and leading bankers attended private meetings at the Forum on Thursday that focused on the eurozone and other issues of global financial stability.
Geithner voiced confidence at a closed-door meeting that EU leaders had taken a fundamental decision to do what it takes to keep Europe together, according to participants. A year after the Greek fiscal crisis dominated Davos, leading to bailouts for Greece in May and Ireland in December, business leaders say expectations are growing that the EU may be preparing effective action to help weaker members of the single currency area and restore confidence in the financial sector.
"I think Europe did the only good choice, which is to get through this crisis, because if you don't fix it here, you're going to fix it there, which is in the banking system," J.P. Morgan Chase Chief Executive Jamie Dimon said. European Central Bank chief Jean-Claude Trichet echoed Sarkozy's robust defence, telling another panel: "There is no crisis of the euro currency. That is absolutely clear."
Greek Prime Minister George Papandreou told delegates there was no question of his country defaulting or restructuring its debt, but Athens expected more time to repay IMF/EU rescue loans at a lower interest rate to help avoid a funding "bump" in 2014. Trichet said there was no debt rescheduling or "haircut" - in which bondholders are penalised by not receiving full repayment - in the programmes of the crisis-hit eurozone states.
EU leaders are expected to adopt a comprehensive package of measures at a summit in late March involving reforms to its rescue fund, tougher fiscal discipline rules and commitments to structural economic reforms to improve competitiveness. Many market analysts say Greece's debt burden, set to reach 158 percent of gross domestic product in 2013, is unsustainable and will have to be restructured or rescheduled sooner or later.
US economist Nouriel Roubini - nicknamed Dr Doom for his early warnings before the financial crisis - said that without stronger growth, Greece would not be able to service its debt. "We need an orderly restructuring of this debt. And we should do this sooner rather than later," he told the WEF forum in the Swiss ski resort.