The Agriculture Minister and Christian Social Union member, Hans-Peter Friedrich, resigned yesterday over accusations that he leaked confidential data. The information derived from a prosecutor’s investigation into an SPD lawmaker suspected of possessing child pornography. The lawmaker, Sebastian Edathy, has denied the accusations.

Horst Seehofer, head of the Christian Social Union, arch-conservative wing of Merkel’s Christian Democrats, has demanded explanations from the Social Democrats.

Merkel’s governing “grand coalition” is potentially under serious pressure and could even risk collapse if the scandal undermines the position of SPD chairman Sigmar Gabriel, who was tipped off about the investigation by then-interior Friedrich in October.

What began as a small domestic scandal about Edathy erupted into a major political furore when the SPD said Friedrich had warned Gabriel that Edathy could become a target of an investigation

Reuters has more here

This story will definitely be one to keep an eye on with potential negative impact on the teflon-coated euro if matters escalate.