UPDATE 2-Schaeuble says euro trading in reasonable range

* Schaeuble says economy performing well

* CDU says euro zone debt must carry haircut risk in future
(Adds CDU on debt issuance, quotes, details)

By Paul Carrel and Erik Kirschbaum

BERLIN, Aug 25 (BestGrowthStock) – The euro is trading in a
“reasonable range” and markets have accepted the decisions
taken by policymakers to support the European single currency,
German Finance Minister Wolfgang Schaeuble said on Wednesday.

He also said the German economy was on a good path even if
economic growth would be a bit lower next year. Positive
economic indicators had shown the German government’s
recession-fighting policies were right, he added.

“We’re going in the right direction,” Schaeuble told the
foreign press association in Berlin. “We’ve got a good
development with the economy and on the labour market. But I’d
also like to point out that in the last quarter we had more
imports than in any quarter in German history.”

Schaeuble said markets were showing acceptance for what had
been done in support of the single currency. “The euro has been
trading in a reasonable range,” he said.

Separately, a senior member of Schaeuble’s conservative
Christian Democrats (CDU) said investors in euro zone sovereign
debt issued after a 750 billion euro rescue mechanism for the
single currency expires in 2013 should face the risk of a
“haircut” to help protect the euro against future crises.

Schaeuble also said good progress was being made on
developing common European financial regulations and that a
bank restructuring law backed by the German cabinet on
Wednesday would help prevent future crises.

“The bank restructuring measure passed by the government is
a further, important step on the way to learning lessons from
the financial crisis,” he said.

“In principle we need to do two things,” he added. “First,
we’ve got to reduce the high public deficits in all countries
— and the German government is on the right path there. And
the second thing we have to do is regulation.

“We’re working on a common European solution and the
efforts are making good progress,” he said.

Germany, which has shouldered the biggest share of risks in
a bailout of Greece and the package assembled to protect the
euro currency, has been pushing for the creation of a mechanism
to allow the “orderly insolvency” of member states.

The euro rescue mechanism is due to run out in mid-2013,
and Chancellor Angela Merkel’s centre-right coalition is eager
to avoid German taxpayers being left on the hook again for
other countries’ debts.

Any sovereign debt issued by euro zone members after the
mechanism expires should carry the risk for investors of a
haircut, or discount, if the issuers become insolvent, said
Norbert Barthle, the CDU’s budgetary spokesman.

Germany would press for legal steps to be taken to enable
this in the 16-nation currency bloc, he said.

Barthle said the prospect of potential haircuts on debt was
vital to discourage member states from losing control of their
finances and putting the single currency under threat.

“This was discussed as a potential option during the
crisis,” he told Reuters. “Once the rescue mechanism runs out,
corresponding regulations must take effect.”
(Writing by Dave Graham; Editing by Dan Grebler)

UPDATE 2-Schaeuble says euro trading in reasonable range