Eurobonds a 'good idea' but not now - Spain

16th August 2011, Comments 0 comments

Spain's Finance Minister Elena Salgado Tuesday backed eurobonds as "a good idea" but said they would not be introduced any time soon due to German "reluctance."

The idea of eurobonds issued and guaranteed by countries with better credit ratings has long been floated as a way of helping debt-saddled Greece and other struggling eurozone members.

But Germany is opposed to their introduction as it believes this would increase its own borrowing costs and allow countries to avoid implementing much-needed reforms.

"I think it would be a good idea, but I can't see it on the table, honestly, at the moment," Salgado told Cadena Ser radio.

"I repeat. I think it would be a good idea that can get on the road slowly."

But for that, "it is absolutely essential that countries which need to carry out reforms do it in depth and with determination."

And there is "reluctance" among the German public "about greater fiscal integration of the economies" of Europe.

German Finance Minister Wolfgang Schaeuble at the weekend told Spiegel magazine he ruled out introducing eurobonds at the present time.

"I reject eurobonds for as long as member states operate their own fiscal policy and we need different interest rates so that there are possible incentives and sanctions to enforce fiscal solidity," he said.

"There will be no pooling of debt and unlimited aid," he added.

France's Nicolas Sarkozy met Germany's Angela Merkel in Paris on Tuesday as jittery markets anxiously awaited any sign that European leaders have a plan to resolve the eurozone debt crisis.

© 2011 AFP

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