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Upcoming German Elections May Take Precedence Over Eurozone Repair

ByBenzinga
AuthorBenzinga
Published 07/29/2013, 06:09 AM
Updated 05/14/2017, 06:45 AM

The euro started the week strong trading just below $1.33 on Monday morning. The common currency has recently found strength in a weaker dollar despite ongoing financial and political problems throughout the bloc.

Last week, the region's governments approved Greece's next installment of bailout money which is expected to keep Athens afloat through September. Although Germany's lawmakers have until 12 o'clock today to object to the bailout transfer, many were surprised that the powerhouse nation wasn't more particular about Greece's balance sheet before handing over the cash.

With German elections coming up in September, German policy makers have been accused of jockeying for position and not wanting to rock the boat. However, Bloomberg reported that German Finance Minister Wolfgang Schaeuble spoke out saying that the bloc would continue to put pressure on Greece to follow through on its austerity promises.

In another interview, Schaeuble said eurozone governments will stand by Greece as it weathers this financial storm, but he dismissed the possibility of a debt write down.

Although the 2.5 billion euros of bailout aid needed by Greece were cleared on July 26, a 3.8 billion euro funding gap expected in 2014 is still looming in the distance. Moving forward, eurozone leaders will be looking at options to best fill this hole, but no decision is expected until April 2014, as the European statistics office confirms whether or not Greece had a primary surplus in 2013.

Currently, the possible options for plugging the hole include using funds that have been earmarked for banks and sending Greece back into the short-term bond market.

BY Laura Brodbeck

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