Merkel defends "unprecedented" euro rescue package (1st Lead)

May 10, 2010, 10:46 GMT

Berlin - German Chancellor Angela Merkel on Monday defended the 'unprecedented' 750-billion-euro (960-billion-dollar) safety net for eurozone members agreed upon overnight in Brussels.

Merkel said the 'unique' measures served to 'strengthen and protect' the euro currency against 'broad attacks' on the markets.

'This package is necessary and it serves to guarantee and secure the future of the euro,' Merkel said.

'We are protecting the money of the people in Germany,' the chancellor added in her televised address. The European Union and International Monetary Fund (IMF) agreed to the system of loans and loan guarantees for eurozone members that run into financial trouble, in a late night deal aimed at placating the markets.

Merkel stressed the importance of 'tackling the root of the problem,' and said the rescue package would be attached to stringent demands for any ailing eurozone economy to enact budget reforms.

'All eurozone member states are obligating themselves to speed up and drive forward their budget consolidation,' Merkel said.

The euro rescue package calls into question German tax reforms, pledged last year by Merkel's government coalition.

The chancellor welcomed further savings measures announced by Spain and Portugal, and said this sent an 'important message to the markets.'

Merkel concluded that the joint eurozone decision was a 'decisive and united message to those who think they can weaken Europe.'

The chancellor has called a cabinet meeting to agree to the measures on Tuesday, before seeking legislative approval in the German parliament.