European bonds plan proposed amid eurozone crisis
European leaders were urged on Monday to create a market for joint European government bonds in a bid to end the eurozone's mounting crisis, but the suggestion was met with German scepticism.
Jean-Claude Juncker, head of the Eurogroup of eurozone finance ministers, and Giulio Tremonti, Italy's finance minister, called for the rapid introduction of "E-bonds," in a joint article in the Financial Times.
As Europe's finance ministers meet in Brussels to try to secure the euro's future, Juncker and Tremonti urged the creation of the new bonds to send a message to markets and European citizens about "the irreversibility of the euro."
The plan would lead to a "liquid global market for European bonds," they wrote, which would help protect countries from speculation and attract new capital flows into Europe.
"We believe this proposal provides a strong, credible and timely response to the ongoing sovereign debt crisis," said Juncker -- who is also Luxembourg's prime minister -- and Tremonti.
They said the European Council could take steps towards creating an agency to issue the bonds as soon as this month.
But Germany, Europe's biggest economy, played down the chance "E-bonds" could be introduced any time soon, highlighting divisions in the eurozone over how to deal with the crisis gripping the single currency.
German Finance Minister Wolfgang Schaeuble said introducing such joint bonds in the eurozone would not be possible "without fundamental changes" in the European framework, in comments to the Financial Times.
He added it was vital governments had incentives to maintain discipline over finances and faced sanctions when they did not, the FT reported.
The eurobond proposal came ahead of a meeting of Europe's finance ministers in Brussels later Monday with the response mechanism to the wider eurozone debt crisis surrounded by doubts.
Ireland's bailout is also endangered by domestic politics as the country's leaders prepare to try and push through an austerity budget, and there are growing fears Portugal could be in need of imminent aid.
The ministers will seek to move from fire-fighting to securing solid future foundations for the eurozone at the December 16-17 EU summit.
© 2010 AFP