BERLIN (MNI) – German government bond yields will likely stay low,
Finance Minister Wolfgang Schaeuble said Monday, stressing that the
government will stick to its budget consolidation course.
“More speaks for than against” interest rates on German government
bonds staying low, Schaeuble said at an event organized by the INSM
foundation in Berlin.
Federal net new borrowing this year will likely amount to E50
billion this year and less than that next year, the minister reaffirmed.
Initially, the government had planned borrowing of E80.2 billion for
2010 and E57.5 billion for 2011.
Schaeuble also reaffirmed the need for a new and different EU
sovereign debt crisis mechanism after the rescue funds for Greece and
the Eurozone as a whole expire in 2013.
He once again stressed the need for private creditors to shoulder
part of the losses in future sovereign debt crises. “This doesn’t apply
to current creditors but only to future ones,” he stressed.
In an interview published earlier today Schaeuble revealed first
details of Germany’s proposal for restructuring sovereign debt.
“I envisage a two-stage procedure,” Schaeuble said: if a country
gets into payment problems, the European Union should start a
consolidation and restructuring program.
“In a first step, the maturities for bonds which are due during
that critical phase could be stretched,” the minister proposed. “If that
does not help, private creditors need to accept, in a second step, a
reduction of their claims. In return they would get guarantees for the
rest.”
EU heads of state and government in Brussels agreed last month to
establish a permanent mechanism to aid Eurozone states that fall into
financial difficulty.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
[TOPICS: MT$$$$,M$G$$$,M$X$$$,MFX$$$,MGX$$$,MFGBU$]
