German Chancellor: Euro Currency will Survive Debt Crisis

German Chancellor Angela Merkel says the 16-nation euro currency will survive the continent’s debt crisis and says no member of the eurozone risks having to restructure its debt.

Ms. Merkel spoke Thursday in Berlin, seeking to reassure financial markets as the euro wallowed near a two-month low against the dollar.

Many analysts are voicing fears the euro’s value could drop further if Spain and Portugal follow Greece and Ireland in seeking massive international bailouts.

The chancellor acknowledged what she called “a high degree of nervousness” in the markets. But she also said she is more confident than earlier this year that the European Union will emerge “strengthened” from its current challenges.

Ms. Merkel and French President Nicolas Sarkozy, the leaders of the eurozone’s twin economic mainstays, were set to discuss the debt crisis by telephone later Thursday.

Most experts say the European union’s trillion-dollar emergency fund will cover Greek and Irish debt, as well as Portugal’s, if Lisbon asks for help. But others say the possible bailout of Spain — with an economy five times larger than any of the other three countries — would place unprecedented strain on the euro and threaten its existence.

Portugal and Spain are widely seen as the eurozone’s weakest links, after Ireland agreed this week to accept a EU-IMF bailout plan similar to one already under way in Greece.

On Tuesday, European Council President Herman van Rompuy said Portugal does not need the kind of financial help planned for Ireland. He said Portugal’s banks are well capitalized, and that the country has not experienced the type of housing market collapse that has affected other economies.

Some information in this story was provided by AP, AFP and Reuters.