FRANKFURT (MNI) – The Eurozone must find new ways of supporting
countries that have enacted structural reforms and maintained fiscal
discipline but nevertheless remain under the scrutiny of markets,
Italian Prime Minister Mario Monti said in an interview with German
daily Sueddeutsche Zeitung published Friday.

EMU stability will come in part “through new mechanisms that must
be capable of supporting countries that have seriously followed the
requirements for fiscal discipline and structural reforms – the rules of
the EU,” Monti told the paper.

Despite the reforms that these countries have been enacting, “they
are still not being adequately recognized by markets,” Monti said,
though he added that “sometimes it takes a lot of time to win the right
outlook from markets.”

Monti warned that a failure of the EU’s summit in one week would
lead to worse and worse speculative attacks and higher sovereign debt
yields, not just for weaker Eurozone members but also for stronger
countries that carry a high debt legacy, like Italy.

For a successful summit, Monti said EU leaders must take steps
towards “a greater banking union with more common oversight,” as well as
voice a “medium-term perspective” on the goals of deeper integration. He
said there was a risk of the public not supporting the reforms if the
problems were not solved soon.

“To escape the crisis whole requires ever more integration,” Monti
told the paper. “The markets must be convinced that the will is growing
to make the euro undissolvable and irrevocable.”

Monti said the planned meeting in Rome on Friday between him and
the leaders of Germany, France and Spain was meant as an informal
exchange and not to replace the European Council meeting.

On Spain, Monti said the targeted support for Spain’s banks should
help loosen the “unpleasant spiral” of negative feedback between banks
and sovereigns. It was important in aiding sovereigns and banks that one
entity remain above the other, “rather than having both crash.”

On Italy’s own situation, Monti said Italy has “always made clear”
that it was not seeking a bailout from the European Union, and also
“will not need help going forward.” He opined that Italy was still being
forced to pay unnecessarily high yields.

“If Italy does need to ask for help, then that means there is a
problem with the system,” Monti said. “If a country in the Eurozone that
has made such enormous efforts at home still has to pay such high
yields, then something is wrong.”

Monti said Italy’s own situation had “improved greatly” over the
last six months, adding: “There is still more to do, but it is
encouraging to notice that Italy’s voice is being heard.”

Monti also suggested Germany was benefiting from the Eurozone
crisis, though he acknowledged the continent’s largest economy was
paying more money into the EU.

“Germany is profiting from this. Germany is financing itself at
such low interest rates also because of a speculation effect from the
high interest rates of others,” he said.

— Frankfurt bureau: +49 69 720 142; email: ccermak@marketnews.com

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