–Adds Weber’s Opposition to ESM Buying Govt Bonds
FRANKFURT (MNI) – Under future Eurozone bailout rules, countries
that require the assistance of the envisaged European Stability
Mechanism should see the maturities on their outstanding sovereign bonds
extended by three years, European Central Bank Governing Council member
Axel Weber proposed Wednesday.
Thus, a bond with a five-year maturity would become eight years,
and a ten-year bond thirteen years, Weber suggested in an opinion piece
for Germany’s Frankfurter Allgemeine Zeitung.
Three years “is proposed, because in that time period a large share
of the required reforms and consolidation efforts would need to have
been completed in the effected country,” the outgoing head of the
Bundesbank said.
Such “solidly anchored” additional conditions for sovereign debt
would have “numerous” and “weighty” advantages, Weber argued, in a piece
co-authored by Jens Ulbrich, head of the Bundesbank’s Economics
Division, and his deputy, Karsten Wendorff.
In the piece, Weber reiterated his opposition to authorizing the
ESM to purchase sovereign bonds. He rejected that idea along with
others, such as giving up the required unanimity of donor countries when
making important decisions.
“With these measures, the incentives for solid financial policy
would be minimized and important foundations of the currency
union…would be considerably damaged,” Weber argued. “Thus, they are to
be rejected.”
[TOPICS: M$$EC$,MT$$$,M$X$$$,M$G$$$]
