BERLIN (MNI) – The German government opposes the idea that the
European Financial Stability Facility (EFSF) could buy government bonds
of ailing Eurozone member states to narrow sovereign spreads, a
government spokesman said Monday.
“The federal government thinks that this not a good idea,”
spokesman Steffen Seibert said at a regular government press conference
here. He pointed out that the current intergovernmental contract forming
the EFSF doesn’t allow the facility to buy bonds.
Moreover, “The government is convinced that if the [EFSF] would
switch over to buying bonds then the pressure on…indebted countries to
come up with programs for a recovery and stabilisation would decrease,”
he explained.
Seibert said the government had carefully examined the proposal
before rejecting it.
He once again stressed that Germany also still opposes the idea of
issuing joint eurobonds.
The government isn’t against eurobonds because they would drive up
borrowing costs for Germany, the spokesman insisted. Rather, it believes
that issuing eurobonds would reduce incentives for governments in the
Eurozone to bring their budgets in order, he explained.
Seibert said there are “increasing signs” that eurobonds will not
be a topic at the upcoming EU summit of heads of state and government
this Thursday and Friday. “However, there is no certainty in that
regard,” he added.
The spokesman reaffirmed the government’s position that there is
currently no need to increase the existing EU rescue funds, noting that
only a small fraction of the funds has yet been used.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
[TOPICS: M$X$$$,M$$CR$,MGX$$$,M$$FX$,M$G$$$,MT$$$$,MFX$$$]
