European Central Bank Governing Council member Axel Weber said euro bonds wouldn’t improve confidence in euro-region member states’ finances.
“The increased discussion about issuing euro bonds has to be seen very critically,” Weber, who is also head of Germany’s Bundesbank, said in a speech in Munich today. Euro bonds would undermine “fiscal self-responsibility and wouldn’t really strengthen confidence. For a sustainable solution of the current crisis, the already existing instrument of the European rescue fund is much better suited.”
European Union leaders yesterday agreed to create a permanent crisis-resolution mechanism in 2013 to help restore investor confidence and stop contagion in the 16-member region. While Ireland last month become the second euro nation to ask for external support, German and French policy makers have dismissed calls to issue joint euro-region government bonds.
ECB President Jean-Claude Trichet earlier this week signaled that he shares this position.
“In the previous period, the ECB had said that it was not necessarily appropriate to have such type of bonds,” Trichet said in Frankfurt on Dec. 13. “We were very clear on that.”
Weber said that “ambitious and credible consolidation measures” and tougher budget rules are needed to fight the turmoil. The crisis mechanism should be designed without hurting the “principle of fiscal self-responsibility,” he said.
To contact the reporters on this story: Jeff Black in Frankfurt at jblack25@bloomberg.net; Jana Randow in Frankfurt at jrandow@bloomberg.net.
To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net
