Merkel warns if euro fails, so does Europe and the EU

(BERLIN) - German Chancellor Angela Merkel warned on Thursday that if the euro currency is allowed to fail, then so will Europe and the whole European Union project.

"If the euro fails, it's not only the currency that fails but much more, it's Europe that fails and with it the idea of the European Union," Merkel said.

Eurozone governments have vowed to assure the euro's stability and "we must keep that promise," Merkel said, with the euro having suffered heavy losses on global markets in recent weeks amid fears Greece's debt crisis might spread.

Merkel said that the current crisis is "the biggest test" for the EU, possibly since the founding Rome Treaty in 1957, but that it should serve to strengthen the EU.

"We have a common currency but we don't have economic and political union," she said, adding that one day "all European Union member states will have the euro as means of payment."

Merkel was speaking at a ceremony to award the Charlemagne Prize to Polish Prime Minister Donald Tusk.

Merkel, who was herself awarded the Charlemagne Prize for distinguished service on behalf of European unification in 2008, said she hoped the EU would progress in other arenas, "for instance a common European defence force."

In 2002, the single currency itself was awarded the prize.