Opinion

Paul Taylor

Euro zone bonds idea won’t go away

Paul Taylor
Dec 13, 2010 09:08 UTC

PARIS (Reuters) – Angela Merkel was so determined to kill off the idea of issuing common European bonds that, having tried to squelch it, the German chancellor reversed over it several times last week to make sure it was dead.

French President Nicolas Sarkozy, anxious to stay in Germany’s slipstream and avoid any threat to France’s top notch credit rating, joined her in swatting the suggestion, for now.

But the “E-bond” proposal championed by Jean-Claude Juncker, the chairman of euro zone finance ministers, and Italian Economy Minister Giulio Tremonti won’t go away because it makes sense.

“I’m convinced we’ll end up doing it, because it’s obviously the most effective solution,” said Jean-Herve Lorenzi, president of the Cercle des Economistes, a French economic think-tank. “Everyone thinks it’s a good idea but it can’t be brought into play for the moment.”

The euro zone debt crisis may have to get much worse before Germany, Europe’s chief paymaster and stickler for budget discipline, is prepared to accept such a quantum leap in European fiscal integration.

Analysis: Euro zone bonds idea won’t go away

Paul Taylor
Dec 13, 2010 06:52 UTC

PARIS (Reuters) – Angela Merkel was so determined to kill off the idea of issuing common European bonds that, having tried to squelch it, the German chancellor reversed over it several times last week to make sure it was dead.

French President Nicolas Sarkozy, anxious to stay in Germany’s slipstream and avoid any threat to France’s top notch credit rating, joined her in swatting the suggestion, for now.

But the “E-bond” proposal championed by Jean-Claude Juncker, the chairman of euro zone finance ministers, and Italian Economy Minister Giulio Tremonti won’t go away because it makes sense.

Euro zone jitters spread to German bonds

Paul Taylor
Dec 8, 2010 13:08 UTC

LONDON/PARIS (Reuters) – Yields on German government bonds, normally seen as a safe haven by investors, rose on Wednesday as deepening uncertainty over how to stem the euro zone’s debt crisis hit even Europe’s strongest economy.

The yield on the 10-year German Bund, the benchmark for all euro zone debt, topped 3 percent for the first time in seven months, partly due to a sell-off in U.S. Treasuries but also due to anxiety over policy differences within the European Union.

Germany and France are pushing for an EU summit next week to approve a proposed treaty change that would allow debt-stricken euro zone states to make an orderly default, with private sector bondholders sharing losses on a case-by-case basis.

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