Sarkozy says he, Merkel will never abandon euro
Sarkozy spoke as financial executives attending the Davos forum voiced cautious optimism that the euro zone's debt crisis could be resolved without contagion spreading to Spain or investors being forced to take unbearable losses.
"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, European Union top monetary official Olli Rehn and leading bankers were due to attend private meetings and discussion panels at the Forum on Thursday which will discuss the euro zone and other topics.
Optimism
Financial executives attending the Davos forum voiced cautious optimism that the euro zone's debt crisis would be resolved without contagion spreading to Spain or investors being forced to take unbearable losses.
He said it would be far too risky for any country in the euro zone to restructure its debt, citing the weakness of the financial sector and the risk of triggering unpredictable capital flight and a banking crisis.
European insurance executives said private bondholders might be asked to take some write-down, known as a haircut, on some southern euro zone countries' debt in the next few years but it would not cause severe problems for their business.
"We're positive the euro will continue to exist as a currency and the euro zone countries will work out their problems overall," Dieter Wemmer, chief financial officer of insurer Zurich Financial told reporters.
"I think that there's the likelihood that in some areas some haircut will occur. Whether it will be dramatic -I don't think so," Wemmer said in an interview.
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.
In an interview with Reuters Insider television, uropean Central Bank Jean-Claude Trichet called for a strengthening of the US$603 billion European Financial Stability Facility "both in quantity and in quality". The fund should be made as flexible as possible and allowed to buy troubled countries' bonds, he said.
The ECB has bought 76.5 billion euros in Greek, Irish and Portuguese bonds since May to stabilize the euro zone bond market, as well as providing cheap liquidity to those countries' banks. But it is looking to exit those emergency policies.
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