July 11, 2012 / 3:59 AM / 7 years ago

Euro zone in very dangerous situation - Finnish premier

HELSINKI (Reuters) - The euro zone is in its most dangerous situation in more than two years, Finnish Prime Minister Jyrki Katainen was quoted as saying on Wednesday.

“This situation is dangerous, very dangerous,” Katainen said in an interview with Finland’s biggest daily, Helsingin Sanomat.

He added that the last time the euro zone’s situation was so critical was in May 2010, when Greece was near collapse for the first time.

Katainen said it was very difficult to imagine what kind of chaos there would be if the euro area were to collapse.

“But we are not working for the break-up of the euro, but to preserve it and Finland’s euro zone membership every day,” he said.

Finland is one of few remaining euro zone members to retain a AAA credit rating and, conscious of public opinion at home, Helsinki has been wary of taking on more liabilities regarding weaker euro zone states. It is in talks with Spain on collateral against participation in the currency bloc’s planned aid for Spanish banks.

Euro zone ministers agreed early on Tuesday to make 30 billion euros (23.7 billion pounds) available for Spanish banks by the end of July if struggling lenders urgently need funds.

Finnish Finance Minister Jutta Urpilainen said on Tuesday the Nordic country cannot participate in the planned aid for Spain by the end of July unless the two countries can agree on collateral before then.

Katainen said the euro zone’s difficult situation had created lack of trust between AAA-rated northern countries and southern European countries grappling with debt crises.

“All euro area countries want to keep euro. There are differences of opinions about what kind of actions that requires,” he said.

Reporting by Terhi Kinnunen; Editing by David Brunnstrom and Sandra Maler

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