Germany digs in heels on eurobonds
German Finance Minister Wolfgang Schaeuble reiterated Wednesday his opposition to eurobonds, saying such financial instruments would not solve the eurozone's debt crisis. Eurobonds -- the pooling of the debt of eurozone countries -- would "provide totally the wrong incentive," Schaeuble told NDR public radio. They "would not promote fiscal discipline, but the opposite. We're ready to talk openly about any proposal. But we're not going to do the opposite of what will solve (the eurozone's) problems," he said. Schaeuble was speaking before an EU summit in Brussels where France and other countries are likely to pressure Berlin to drop its opposition to eurobonds. New French President Francois Hollande is pushing them as a solution to the long-running debt crisis. The European Commission is also strongly in favour and has put forward proposals for so-called stability bonds they believe would drive down borrowing costs for debt-stricken countries such as Italy and Spain. In a newspaper interview on Wednesday, Germany's EU Commissioner Guenther Oettinger insisted eurobonds should not be ruled out per se. "My advice to everyone involved would be not to rule out eurobonds fundamentally," Oettinger told the business daily Handelsblatt. It was "a matter of timing," Oettinger argued. Eurobonds could be the "keystone" to a new financial architecture, but only once all eurozone countries had ratified a fiscal accord and were firmly on the path to consolidation, the commissioner said. In his interview, Schaeuble said it was "natural that every country that is having to pay high interest rates would want to pay lower interest rates. "That's necessary," the finance minister said. "But for that the countries have to convince the financial markets. And they can only do that by pursuing solid fiscal policy, plus structural reforms that will boost growth," Schaeuble said. The single currency area's problems can only be solved by countries -- including Germany -- bringing down their deficits. "That is the real problem and we mustn't lose sight of that," Schaeuble said. "And that's why we've always said that, as long as each country is responsible for its own fiscal policy, it is out of the question that the entire bloc should shoulder the liability for a country's bonds," he said.
