Euro zone sources have said its members are not discussing making changes to the European Financial Stability Facility (EFSF) or the scope of its operations, including purchases of bonds.
The Financial Times reported today that European officials were considering plans to overhaul the EU's portion of the €750 billion EU/IMF-backed fund and use it to buy the bonds of struggling governments.
'This is not being seriously considered,' one senior euro zone source told the Reuters news agency.
Such a step would make it easier to help debt-laden countries without resorting to fully-fledged bail-outs, the newspaper said, citing people involved with the deliberations.
Only the European Central Bank has so far purchased bonds of embattled peripheral euro zone countries such as Ireland and Portugal to lower their borrowing costs, a move that proved controversial even within the bank itself.
The FT also reported that the EFSF, which is set to be replaced by a permanent fund in 2013, could be modified to provide short-term credit to countries struggling to borrow on the market but not in need of a multi-year bail-out package.
EU leaders will agree next week to insert two sentences into the EU treaty to pave the way for the creation of the European Stability Mechanism from 2013, draft conclusions of the summit showed on Saturday.
Euro bond 'would add to Germany's costs'
Issuing a common euro zone bond would cost Germany at least €17 billion more per year, the daily Frankfurter Allgemeine Zeitung (FAZ) said today.
The newspaper did not cite the source for its figure but said Chancellor Angela Merkel 'could count on it' during a European Union summit meeting in Brussels later this week.
Merkel is staunchly opposed to a proposal by Eurogroup chairman Jean-Claude Juncker of Luxembourg to issue common euro zone bonds, an idea backed by several countries in southern Europe. France, the Netherlands and other EU members have said they too oppose the plan.
A common bond would lower borrowing costs for countries with debts and deficits that make them higher risks in financial markets. But it would raise costs for those that have maintained tighter fiscal discipline.
According to the newspaper, the average bond yield, or interest rate, across the euro zone is 3.31%, whereas Germany now pays average interest of 1.73% to tap financial markets.
Merkel said Friday that 'sharing interest rates and risks is not going to help us structurally'.
'What is more important is more coherence in economic policy,' she added during a joint press conference with French President Nicolas Sarkozy.
He took a similar position, saying: 'Countries should be given responsibilities, not have them taken away.'
