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EU Finance Ministers Dismiss Questions About Euro's Future


Finance ministers of the 12 nations that use the euro currency are dismissing remarks by Italian officials raising doubts about the future of the euro, which recently hit eight-month lows.

Luxembourg Prime Minister, Jean-Claude Juncker, whose country holds the EU presidency, said the finance ministers had no time to waste on what he called "such stupidities."

German finance minister Hans Eichel described newspaper articles about the euro's shaky future as nonsense.

And, Austrian Finance Minister, Karl-Heinz Grasser, called such remarks, the craziest suggestion he has heard in the last century. He said the euro and the monetary union are one of the biggest successes of European integration.

All are referring to comments by the Italian welfare minister and reform minister suggesting that their country should consider returning to the Lira, and dump the euro. Both Italian politicians are from an anti-euro party.

The euro hit eight-month lows around $1.21 last week following the French and Dutch "no" votes on the European constitution. While the constitutional referendum is a political issue, and the strength of the currency is an economic one, many analysts say they have been linked by a nervous financial community. In addition, Italy is in recession and faces action by the EU over its huge budget deficit, leaving the euro as an easy scapegoat for its problems.

Daniel Gros, head of the Center for European Policy Studies in Brussels, says the wave of negative publicity hitting the euro has more to do with media cycles than economic ones.

"It is of course a much more exciting story to write now about the euro, or its weakness, its failure," Mr. Gros says. "They continue to write about the huge external deficit of the United States. Because one has written about this deficit for a very long time and people get bored. This is a new theme, it has come up suddenly, and more over for those countries which are outside of Europe it sometimes looks that these Europeans have undertaken a very strange experiment which people outside Europe very often thing this experiment cannot last."

Economists say the euro has been kept high by the weak dollar. They say Asian currencies remain pegged to the dollar directly or indirectly, leaving the euro to bear all the pressure from the dollar's fall. Many European leaders have long been complaining that this has hurt the European economy by making European products too expensive. For them, the drop in the euro is welcome.