Debt Crisis: Europe to consider eurobonds to calm markets
Published 14/09/2011 | 11:10
The European Commission will consider issuing eurobonds in a bid to stabilise the crisis-stricken area, said president Jose Manuel Barroso.
However, he warned that the bonds would not be a silver bullet to end debt problems in Europe and this continues to threaten its political and economic future.
"This is a fight for the jobs and prosperity of families in all our member states,” he said.
“This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration itself," Mr Barroso said.
He addexd the Commission would shortly present options for the introduction of euro area bonds.
"There has been much debate on the need for eurobonds," Mr Barroso said.
Today I want to confirm that the Commission will soon present options for the introduction of eurobonds. Some of these could be implemented within the terms of the current treaty, and others would require treaty change," he said.
Eurobonds would be issued by the eurozone to back the bonds of individual European member states and are seen by many to be a permanent solution to the present sovereign debt crisis.
They would support weaker member states like Ireland which cannot currently borrow in open markets but would push up the cost of borrowing for richer, triple-A rated states like Germany.
For that reason, Germany is opposed to their issuance and a recent ruling in a top German court would make it almost impossible for Berlin to sign up to the idea.
He told the European Parliament that some bonds could be implemented within the terms of the existing European treaty but others would require legislative changes.
But the euro rose against the dollar and European stocks began to gain ground following Mr Barroso’s comments.
He added that the only way said the only way to calm markets was to provide deeper integration.
Mr Barroso said this should not come as a result of moves by bigger countries like Germany and France taking the first step expecting smaller countries to follow but the Brussels led “community effort” should be used instead.
"A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future," he said.
In an emotive speech in the Belgian capital, he warned that Europe is facing its biggest challenge in a generation.
Greece is on the verge default while other countries like Ireland and Portugal have already been bailed out.
There are also fears for bigger states like Italy and Spain.
A July plan to strengthen the €440bn bailout fund to allow it to buy bonds in the secondary market and lend to countries in trouble has to be ratified by eurozone member countries.