The chief executive of Goldman Sachs (GS), Lloyd Blankfein, is confident the euro will survive despite the debt crisis, he said in an interview with newspaper Welt am Sonntag.
"Naturally we are looking at a very difficult situation, but the euro has always been a political project, and that remains intact," Mr. Blankfein said. "Of course I believe in the euro. The risk that euro will break apart or that individual members are headed for bankruptcy was substantially higher a year ago," he said.
There is clear political commitment to the euro zone and the euro, which forms the basis for solving economic problems over time, he says. "Americans have a history of underestimating the political will of the Europeans to see through the successful creation of a United Europe. I'm not going to make the same mistake," Mr. Blankfein said.
Asked about billionaire investor George Soros's call for Germany to either exit the euro or accept the idea of so-called euro bonds, Mr. Blankfein dismissed those "extreme scenarios."
"The solution surely lies somewhere in the middle. The stronger countries will have to prop up the weaker ones," Mr. Blankfein said, adding that "will change in the long term."
For Europe's banking industry, Mr. Blankfein said he wouldn't recommend an institutional separation of big banks' activities because he doesn't consider that a way of making banks safer, comparing such separation proposals to the Volcker Rule in the U.S.
While there are risks connected to a bank's size, Mr. Blankfein defended big banks, saying they offer "a kind of insurance."
"A big bank doesn't go bankrupt if it loses $1 billion. And size allows for diversification," he says. "If a bank is involved in only one kind of business, its risk is higher than that of a broadly diversified bank. And large banks can make large loans; that's something that small banks can't do because they lack the capacity to bear the risk.
Newspaper website: http://www.welt.de
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