G7 confident European Union can solve Greece woes

Members of the Group of Seven industrialised nations are confident that the European Union will sort out Greece's debt problems, German finance minister Wolfgang Schaeuble was quoted as saying on Monday.                                           

"All our partners outside the euro zone have the clear impression that Europeans can solve these problems," Schaeuble told Monday's Frankfurter Allgemeine Zeitung.                                            

He said a meeting of G7 finance ministers over the weekend in Canada had agreed not to discuss internal problems.                                           

"We in the G7 do not discuss the financial problems of the state of California," said Schaeuble.                                           

He also reiterated that Greece was not a case for the International Monetary Fund.                                           

Investors are worried that Greece will not be able to pay its debts and that there will be a knock-on effect in the euro zone. At the weekend G7 meeting, European finance ministers said they would make sure Greece delivered on its promises to slash its budget deficit by the end of 2012.                                           

In a separate newspaper, Finnish finance minister Jyrki Katainen demanded financial penalties for countries like Greece.                                           

"It would be sensible to reform the Stability Pact so that countries are punished harshly if they make false claims about their debt situation, for example through high fines which would scare them off," Katainen told Die Welt newspaper.