Friday 15 December 2017

Luxembourg PM calls for sale of bonds to finance bailout of struggling states

LUXEMBOURG Prime Minister Jean-Claude Juncker yesterday called for the sale of Eurobonds to finance bailouts of deficit-swamped euro-area governments and backed the ECB in a split over how to quell the debt crisis.

Mr Juncker said he shares ECB president Jean-Claude Trichet's concerns that a German-French proposal to force investors to foot part of future rescue bills could dry up demand for bonds from fiscally troubled countries such as Ireland.

"This could potentially drive investors from the eurozone, especially from the peripheral countries," Mr Juncker, who heads the panel of euro-area finance ministers, told a European Parliament committee in Brussels. Europe would be isolated by declaring "ex-ante that in every instance of crisis resolution, the private sector has to be implicated".

Bonds in Ireland, Portugal and Greece have plummeted since EU leaders agreed on October 29 to consider Chancellor Angela Merkel's proposal for a permanent rescue mechanism as of 2013 that would involve debt restructuring with losses for private holders of sovereign bonds.

Merkel and German Finance Minister Wolfgang Schaeuble have said their proposal isn't to blame for the drop in Irish, Portuguese and Greek bonds.

(Bloomberg)

Irish Independent

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