nation euro currency will survive the debt crisis, German Chancellor Angela Merkel vowed Thursday, and a senior central banker said the European Union would be willing to increase its $1 trillion bailout fund if necessary. As Merkel spoke, the euro wallowed near two-month lows against the dollar. Some analysts predicted it would drop further as other heavily indebted countries, like Portugal and Spain, risk following Greece and Ireland in needing massive bailouts. The euro was down 0.3 percent Thursday at $1.3297 - from a recent high of $1.4244 on Nov. 4. “I'm more confident than this spring that the European Union will emerge strengthened from the current challenges,” Merkel told business leaders in Berlin, referring to May's €110 billion ($146 billion) bailout of Greece by the EU and the International Monetary Fund. She said the crisis has strengthened the eurozone, leading EU leaders to agree on new rules for a tougher growth and stability pact, and bringing into operation the €750 billion ($1 trillion) emergency fund. “We now have a mechanism of collective solidarity for the euro,” she said. “And we all are ready, including Germany, to say that we now need a permanent crisis mechanism to protect the euro,” Merkel added. Experts say that while rescuing Greece, Ireland or even Portugal is manageable for the EU's emergency fund, bailing out Spain - whose economy is five times larger than any of the other three countries - would test its limits and threaten the euro's existence. Axel Weber, the head of Germany's central bank and a leading rate-setter at the European Central Bank, said European nations would be willing to boost the emergency fund by as much as €100 billion ($133 billion) to fully cover the total public debt load of Greece, Ireland, Portugal and Spain. The four countries' debt load totals a little more than ¤1 trillion, and Weber said about €925 billion are already guaranteed - adding up the €110 billion Greek loan package, the €750 billion fund and the government bonds bought by the ECB - leaving only a gap of about €100 billion. “It's not the euro that is in danger, it's the fiscal policy in some member states that got out of hand,” Weber said. “The euro is one of the world's most stable currencies,” he added.
