Euro zone countries could split 'Goldman Sachs

Countries in the euro zone will find it increasingly unattractive to stay in the single currency, if there is a German-led fiscal integration, the Chairman of Goldman Sachs Asset Management, Jim ONeill, said in a Sunday Telegraph interview.Portugal, Ireland, Finland and Greece could all pull out of the euro zone rather than operate under a single treasury, ONeill, whose division manages more than $800bn (500bn) of assets, was cited as saying.He also called on the European Central Bank to show more leadership to reassure "worried investors.""The Germans want more fiscal unity and much tougher central observation with the idea of a finance ministry," ONeill said."With that caveat, it is tough to see all countries that joined wanting to live with that, including the one that is so troubled here (Greece)."Reuters reported that the Goldman Sachs boss added that only countries such as Germany, France and Benelux, were suited for a monetary union because their exchange rates were closely linked. But for others, it was questionable.ONeill said countries such as Finland and Ireland that are neighbors of non-euro zone countries - the UK and Sweden - might prefer to quit the euro, which would bolster the strength of the single currency.He added that the Brussels bailout deal will not solve the crisis and that the ECB needed to buy bonds.Since the ECB resumed its bond buying programme around three months ago it has purchased some 100bn of government bonds, a majority of which are thought to be Italian BTPs.Italy is seen as the next domino that could fall in the euro zone crisis, with yields on its 10-year bonds reaching 6.38 per cent, close to the seven per cent threshold widely viewed as unsustainable.A member of the ECB was reported on Saturday as saying it frequently debated the option of ending its purchases of Italian bonds unless Rome delivers on reforms.ONeill told BBC radio on Sunday that it will be "really interesting" to see how the markets react to the ECBs comments when they reopen on Monday.He said the comments gave the impression the ECB was not an eager participant in trying to support the Italian bond market and bringing about stability.
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