Schauble, who has been the most hardline of the eurozone ministers during bailout discussions with Greece, told Deutschlandfunk that a temporary withdrawal from the euro was undesirable and could not be imposed on Athens.
Earlier, the Greek parliament passed a string of austerity measures needed for an 85 billion euro ($93 billion) bailout from Europe but there are fears the debt is unsustainable and would have to be partly written off to save Greece from bankruptcy.
Germany has argued that such a debt reduction — known as a “haircut” — would be against EU rules.
“A substantial debt haircut is not consistent with membership to the monetary union,” Schauble said.
Asked about a temporary “Grexit”, which Schauble suggested during crisis talks in Brussels last week but is opposed by France and Italy, he said: “That is not something we want and it is not something what we are recommending. But perhaps it might be a better way for Greece.”
Schauble criticized Athens for delaying the austerity measures and reforms ushered in during a late night vote, leaving the way open for negotiations with the Eurogroup of finance ministers.
“The difficult question during the negotiations will be on the suitability of debt,” Schauble said.
European leaders and Greek Prime Minister Alexis Tsipras agreed on a conditional bailout deal earlier this week after more than 17 hours of negotiations in Brussels.
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