BERLIN (MNI) – French Finance Minister Christine Lagarde said in a
newspaper interview published over the weekend that there are currently
talks underway for buying back government bonds of fiscally ailing
Eurozone member states.
“We are currently discussing whether the [European Financial
Stability Facility] is allowed to buy government bonds or should give
money to highly indebted states so they can buy back their own bonds
with a discount,” Lagarde was quoted as saying by the German weekly Der
Spiegel.
In the case of Greece, the discussions are focused on possibly
lengthening the maturities of Greek government bonds, she told the
magazine. “This would result in a participation of private investors,”
the minister reasoned.
In the interview, Lagarde also did not rule out the possibility
that Eurozone countries could issue joint eurobonds.
If the Eurozone governments embark on a policy which assures a
harmonization of the level of budget deficits, public debt and
competitiveness “then we can talk about eurobonds,” she was quoted by
Der Spiegel as saying.
The magazine also reported that the EU Commission aims to give the
future permanent European Stability Mechanism (ESM) — planned to become
effective by mid-2013 — the right to buy government bonds of fiscally
struggling member states.
Yet, the ESM might still face some parliamentary hurdles. According
to Der Spiegel, an expertise by the legal department of Germany’s lower
house of parliament, the Bundestag, comes to the conclusion that the
German government needs a two-thirds majority in parliament to pass any
laws on the ESM. This means that Chancellor Angela Merkel’s center-right
government coalition would need to secure votes from the opposition.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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