Merkel: euro zone has no orderly insolvency mechanism yet

Reuters

BERLIN (Reuters) - German Chancellor Angela Merkel said on Tuesday there were generally no taboos in politics but that the euro zone crisis would not have a mechanism for orderly insolvency of one of its members until its permanent rescue mechanism comes into power in 2013.

"There are generally no taboos for thought in politics. But we are a government and we must, of course, ... be able to control all process we want to design," she told RBB inforadio in an interview. "We do not currently have such a mechanism (for orderly insolvency in the euro zone) and that's why the (European Stability Mechanism) ESM has to come into force."

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Merkel's comments come a day after Economy Minister Philipp Roesler, who leads the junior coalition party the Free Democrats in her government, said that to stabilize the euro there could "no longer be any taboos." Merkel said in her interview everyone should balance their words carefully to avoid further market volatility.

Merkel also said she was confident her coalition parties would get a majority without having to rely on the opposition in a lower house vote on September 29 on giving the European Financial Stability Fund (EFSF) more powers.

(Reporting by Maria Sheahan and Annika Breidthardt)

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