Europe Economy

Germany Pushes for New Greek Rescue Package


German Chancellor Angela Merkel pressed Monday for a quick agreement on a new rescue package for Greece, and said she is confident that Italy will push through an austerity plan.

German Chancellor Angela Merkel
Michael Gottschalk | AFP | Getty Images

Merkel spoke as finance ministers gathered in Brussels to discuss details of a second bailout for Greece, which Germany wants to see private creditors participate in, and prevent the debt crisis from spilling over into bigger economies such as Italy and Spain.

"I would like to say that Greece must get a new program very quickly, in very, very short order," Merkel said after a meeting with Iceland's prime minister. She did not give a precise timeframe.

The debate concerning Greece's next bailout has unsettled financial markets in the currency union, most dramatically in Italy, as rating agencies warn that even a voluntary private-sector involvement will likely be seen as a partial default of Greece on its massive debts.

Amid the uncertainty, Italian shares fell sharply on Friday and the yield, or percentage rate, demanded on the country's 10-year bonds rose.

Merkel said that Italy needs to send a "very important signal" by passing an austerity budget and that she discussed the issue by phone on Sunday with Italian Premier Silvio Berlusconi.

"I have firm confidence that the Italian government will approve just such a budget ... and, in so doing, Italy will send a signal that it feels committed to consolidation and fighting debt," she said. "The euro in itself is stable, but we have a debt problem in some countries."