BERLIN, Feb 28 (Reuters) - Europe's single currency project is facing its toughest period since its launch over a decade ago and it is essential that Greece tackle the roots of its troubles to restore confidence, German Chancellor Angela Merkel said.
In an interview with public television station ARD on Sunday, Merkel also stressed that no decisions had been taken on providing financial assistance to Greece, which is under acute pressure to reduce its debt mountain and bloated deficit.
"The euro is certainly in the most difficult phase since it was created," Merkel told ARD in the interview, which will be aired later on Sunday.
"And that's why it's so important that we're conscious of the fact that, on the one hand, it's our common currency but on the other hand of the need to really tackle the causes of the troubles at their roots," she added.
"And at the roots are the high Greek deficits and lost credibility. That's why I'm very grateful that the Greek government is planning very couragous savings measures and other measures to improve the deficit situation."
Merkel brushed aside media reports that the German government has been quietly setting aside provisions in its 2010 budget for possible aid to Greece.
"That is definitely not the case. We've got a treaty that does not include any provision for bailing states out, to help them out of a jam. We can best help Greece at the moment by making clear that Greece has to do its own homework, just like it is doing at the moment."
She said the European Commission was monitoring Greece to ensure it took the necessary steps and that no further decisions on aid had been taken.
"There have been absolutely no other decisions taken. I would like to say that quite clearly," Merkel said. "Greece has to do what's necessary for Greece. But that is also important for all of us."
Merkel repeated her view that the European Commission, European Central Bank and International Monetary Fund needed to endorse the Greek consolidation measures.
"I've also said that there have to be assurances now that the EU Commission, the ECB and the IMF are convinced that the Greek consolidation and savings programme is designed so that the problems are really solved," Merkel said.
(Reporting by Matthias Sobolewski; writing by Erik Kirschbaum; editing by Noah Barkin)