EMU could collapse if one member defaults -Germany

(Updates with comments from German, French officials)

LONDON, Feb 25 (BestGrowthStock) – A debt default by one euro zone
member could end the single currency union but this is unlikely,
the head of the German debt management agency said on Thursday.

Ratings agency Standard & Poor’s also said it did not see
the chance of a default in a euro zone country, adding that
there was no possibility of any country leaving the bloc.

“I think if one of the 16 members would default, it would be
a collapse of the whole system,” German Finance Agency managing
director Carl Heinz Daube told a bond conference in London.

“If a country goes bankrupt, it will be the end (of the euro
zone),” he told a panel discussion at a bond conference in
London.

He later told Reuters Insider Television that the debt
crisis plaguing Greece was an acid test for the euro zone
members to stick together and solve their problems.

Earlier, Moritz Kraemer, managing director at sovereign
ratings in Europe, Middle East and Africa at S&P told the
conference that Greek debt remained investment quality despite a
ratings downgrade in recent months.

“(In) the downward ratings action we’ve seen, Greece is the
biggest downgrade, and it’s not the end of the world, it’s still
investment grade,” he said.

S&P said on Wednesday it might cut Greece’s BBB+ rating by
one or two notches within a month, citing downside risks to
growth that could hinder the country’s deficit-cutting plan.
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Peer Moody’s Investors Service said on Thursday any changes
in its ratings on Greece would depend on whether Athens was
smoothly enacting its fiscal reform plans as promised, while a
senior Fitch analyst told Reuters it expects to keep Greece’s
BBB+ rating unchanged for the next few months barring surprises.
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Meanwhile, Daube said it would take a long time for German
debt issuance to get back to levels around 200 billion euros
annually seen before the financial crisis blew out in 2007. He
added he was not expecting to do more bond syndication this
year.

“At the moment we are looking at the dollar zone and some
other currencies as well but the consideration has to be the
arbitrage and a liquid swap market as well so we can match the
structure and there are some natural limits on this as well,” he
said.

Money

(Writing by Emelia Sithole-Matarise, editing by Ron Askew)

EMU could collapse if one member defaults -Germany