Merkel rejects call for eurozone to issue joint debt
Published 22/08/2011 | 05:00
Germany yesterday strongly rejected mounting calls for the eurozone to issue joint debt but signalled it was open for the bloc to move towards a form of fiscal union.
"Eurobonds are exactly the wrong answer to the current crisis," German Chancellor Angela Merkel said yesterday. "They lead us to a debt union and not to a stability union."
Germany, which enjoys lower costs for issuing debt than its single-currency partners, has led resistance to common euro-denominated bonds that would benefit weaker countries like Ireland.
That puts it at odds with a number of partners, including Belgium and Italy, and the European Commission, which this week said it was still studying the feasibility of such bonds and could present draft legislation for them.
Earlier in the weekend, Ms Merkel's finance minister, Wolfgang Schaeuble, said the eurozone could only issue joint debt if it had common fiscal policy or risk creating inflation and destabilising the currency bloc.
Pressure on Germany and France to take radical action on the debt crisis mounted this week as financial markets sagged further and Belgium added its support to calls for the region to issue eurobonds.
Ms Merkel said the solution to the current crisis was in closer economic co-operation in Europe and especially in the eurozone.
"The eurozone has to work even more closely together but we also have to work closely together within the Europe of 27," she said.
"Our currency is not substantiated by a political union. Now the task is to make the euro strong through more economic co-operation and especially more commitment."
Meanwhile, global equity markets are expecting another week of volatility with data out today expected to show further signs of distress in the US economy and some expected the Federal Reserve to launch another programme of quantitative easing.