German Chancellor Angela Merkel has rejected the idea that her government might favour a smaller Eurozone, saying her only goal since the beginning of the debt crisis has been to stabilise the bloc in its current form.
On Wednesday reports suggested that some French and German officials were thinking about proceeding with closer economic integration even if that meant doing so with a smaller group of core Eurozone countries.
"For months, since the very beginning of the euro debt crisis, Germany has had only one goal, that is to bring about a stabilisation of the Eurozone in its current form, to make it more competitive, to consolidate budgets," Merkel told a news conference after talks with Romanian President Traian Basescu.
"And we firmly believe that this common euro area is capable of winning back full credibility, including every single country."
Merkel also called for broad political support for reforms in Greece and said she believed Italy was winning back confidence, but political clarity was still needed in Rome.
In Rome, former European Commissioner Mario Monti emerged as favorite to replace Italian Prime Minister Silvio Berlusconi within days and lead an emergency government that would implement long delayed reforms of pensions, labour markets and business regulation.
Political and economic turmoil in Italy has spurred fears of a possible break-up of the Eurozone with borrowing costs for Europe's third biggest economy at unsustainable levels and the 17-nation currency bloc unable to afford a bailout.
At a Group of 20 meeting in Cannes last week, Merkel and French President Nicolas Sarkozy broke the Eurozone's most sacred taboo and said for the first time that the bloc was prepared to move forward without Greece, if that country put the stability of the broader bloc in danger.
But anger at squabbling politicians in Rome and Athens is building in Germany which, as Europe's largest economy, has shouldered the biggest share of bailouts for Greece, Ireland and Portugal.
A resolution prepared by Merkel's Christian Democrats (CDU) for a party congress in Leipzig next week is expected to state explicitly that members of the Eurozone can leave the bloc if they choose to.
"If a member state is consistently unwilling or unable to stick to the rules that come with a common currency, it can voluntarily leave the Eurozone without leaving the European Union," a passage in the resolution reads.
City A.M. Reporter