German Finance Minister Wolfgang Schäuble on Friday sharply criticized an open letter signed by dozens of economists denouncing decisions about the future of the eurozone taken at last week's European Summit in Brussels.

Schäuble told public broadcaster RBB that the "horror messages" contained in the letter were "irresponsible" and could only serve to confuse the public.

"Financial experts should use the term bank debt responsibly," the finance minister said.

In the letter, published in the Thursday edition of the Frankfurter Allgemeine Zeitung, the more than 170 mostly German economists expressed "great concern" about the decisions taken at the summit. They described them as a "step towards a banking union, which means collective liability for the debts of the banks of the eurosystem."

They argued that this would mean that the citizens of countries like Germany, which have strong economies, could wind up having to foot the bill.

"Banks' debts are nearly three times higher than government debts... the taxpayers, retirees and savers in the so-far solid countries of Europe must not be made liable for backing these debts, particularly since gigantic losses are foreseeable from financing the southern countries' inflationary economic bubbles," they said.

The economists were referring to the agreement reached in Brussels that will allow the permanent European bailout fund to pump money directly into ailing banks, rather than such funds having to go through national governments. This is to happen after an independent supervisory body at the EU-level is established.

The leaders also agreed in principle to let the bailout fund buy government bonds to push down borrowing costs. Italy and Spain had refused to sign on to a growth pact also agreed at the meeting, until immediate action was taken to remedy their high borrowing costs.

No collective liability

In the RBB interview, Finance Minister Schäuble rejected idea that the deal could lead to collective liability.

"At the core it's not about creating collective liability but instead about creating a collective control for Europe," Schäuble said, referring to the agreement to create an independent supervisor.

Chancellor Angela Merkel also rejected the economists' criticism out of hand.

"First of all, this is about better banking supervision, and one can only say that that is urgently necessary," she told reporters on Thursday. "This is absolutely not about any additional liability." She also advised the economists behind the letter to read the fine print of the agreement.

In the meantime, a number of economists have also come out publicly against their colleague's open letter.

A group of 15 prominent German economists released a joint statement in which they expressed their support for the decisions taken last week in Brussels.

“A joint currency zone with freely moving capital can't work properly without a European banking union,” the statement said. “For this reason, the decisions taken at the last EU summit move in the right direction."

pfd/ch (dpa, AP, AFP)