Up and Coming: Lagarde denies 'chronic' problem

Saturday, January 29, 2011

Lagarde denies 'chronic' problem

Ms Lagarde has urged people not to short the euro

Christine Lagarde has become the latest European minister to defend the euro at this year's World Economic Forum in Davos.

She clashed with Barclays chief Bob Diamond, saying she disagreed with his comment that the situation in Europe had gone from "acute" to "chronic".

The French finance minister said the euro had "turned the corner".

She also urged people not to "short", or bet against, the euro and the eurozone.

Ms Lagarde defended eurozone ministers' actions, saying that last year they had acted swiftly and effectively in response to the debt crisis that gripped the Republic of Ireland and threatened to engulf Spain and Portugal.

"We got through that," she said, saying that ministers had managed to put together the 440bn-euro ($599bn; £378bn) rescue fund - the European Financial Stability Facility - in just a week.

On the current economic situation she added: "In terms of fiscal consolidation we are heading in the right direction."

Later in the session, Mr Diamond paid tribute to how the G20 - which France is the current President of - to the financial crisis.

"We should thank the regulators," Mr Diamond said.

"The G20 came together... that was very beneficial for the banking sector."

Christine Lagarde responded by saying that "good financing and sensible compensation" would be better forms of thanks.

Both French President Nicolas Sarkozy and German Chancellor Angela Merkel have used their addresses at this year's World Economic forum to strongly defend to the euro.

"Whether it be [German] Chancellor Merkel or myself, never will we turn our backs on the euro. Never will we abandon the euro," Mr Sarkozy said.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.