German financial sector accused of 'crisis denial'

The Liberal Democrat Sharon Bowles, chairman of the European Parliament's influential Economic and Monetary Policy Committee, said the results of the tests, due out later today, were being manipulated by German banks who think "they can fool the market".

Germany's "crisis-denial" and its failure to own up to its own difficulties was preventing it from rescuing the European project, she said.

Mrs Bowles added: "The banking stress tests will be cathartic for the eurozone sovereign crisis, but not if those seeking secrecy think they can fool the market.

"In their latest round of crisis-denial, German banks are lining up to try and hide what any decent analyst already knows, that there are significant cases of undercapitalisation.

"Publication of the stress tests will not bring Germany and its banks down, but denial of telling things as they really are lies at the heart of Germany's failure to rescue the euro project.

"The UK and other non-eurozone countries are far from isolated from the fallout of failure in the eurozone and I despair that ineffective cover-ups are put ahead of the stability of the euro and the EU at such a critical time."

The latest stress tests come as sources said an emergency meeting of eurozone finance ministers scheduled for today in Brussels to discuss the crisis was abandoned at the last minute after the Germans and the Dutch raised objections.

Last month, it emerged that while the UK's banks were exposed to $13 billion (£8 billion) of Greek debt, the exposure of German banks stood much higher at $34 billion (£21 billion).

Mrs Bowles added that blaming credit rating agencies for recently down-grading Ireland was "shooting the messenger", describing today's meeting of European finance ministers as "crucial".

She added: "It is absolutely no good criticising rating agencies for downgrades of countries in rescue programmes when the certainty that the rescue programmes will work is at stake.

"Shooting the messenger is just another form of cover up to which markets respond negatively. Actions speak louder than words and agreeing on doing everything possible to save the euro has no market value when a meeting of eurozone ministers can not even agree Greece's second bail-out.

"Today's meeting of European finance ministers on the Greek bail out is crucial. They have everything to play for to get the eurozone rescue on the road before the wheels come off altogether."

Mrs Bowles added lenders should offer lower interest rates so the austerity measures put in place by the Greek government can have the desired effect.