FRANKFURT (MNI) – German Chancellor Angela Merkel reiterated her
opposition to a near-term introduction of eurobonds over the weekend and
was backed by other politicians and the influential Bundesbank.
Eurobonds “lead us into a debt union, not a stability union. Every
country has to take its own steps to reduce its debt,” she told public
broadcaster ZDF on Sunday. “The markets want to force us into doing
certain things, and that we won’t do.”
Her finance minister, Wolfgang Schaeuble, warned that in the
absence of joint fiscal policies shared debt issuance would lead to an
“inflation community.” Economic Minister Philipp Roesler, also head of
the coalition partner FDP, said he ruled out that there would be
eurozone bonds “under this government.”
On Monday the Bundesbank also warned against further pooling of
risks without extensive governance reform.
“Without a regime change that sees fiscal sovereignty diminished
greatly” there must be no further weakening of the no-bailout principles
and the Maastricht rules but instead a reenforcement, the central bank
said in its Monthly Report.
As it is, the decisions taken by EU leaders in July would “weaken
the principles of fiscal self-responsibility and discipline fostered by
capital markets on which monetary union is based,” the Bundesbank said.
“As a result there is a risk that Eurozone countries’ inclination
to indebtedness will increase and that the common monetary policy will
be under increasing pressure to be accommodative,” it said.
–Frankfurt bureau tel.: +49-69-720142. Email: jtreeck@marketnews.com
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