EU to discuss Eurobonds informally

EU headquarters in Brussels

Source: Press TV
http://www.presstv.ir/detail/155855.html


European Union members will discuss the introduction of Eurobonds at their current summit informally, due to disagreement among the member states of the bloc.

The 27 European Union countries, held their seventh summit so far this year in the Belgium capital, Brussels, on Thursday.

The proponents of the move consider it as an innovative way to strengthen the European Union's financial stability.

On the other hand, France and Germany, the two dominant economies of the EU, have opposed the proposal, a Press TV correspondent in Paris reported.

However, German leader Angela Merkel said Thursday that she had resolved a dispute with Luxembourg's Prime Minister Jean-Claude Juncker over eurozone bonds.

Juncker, who is the eurozone finance ministers' chairman, has said he will raise the issue of Eurobonds at the summit. Juncker had accused Germany of rejecting the proposal without having studied the detail.

Analysts say Eurobonds would bind the eurozone's 16 countries in sharing credit risk and debt issuance.

Countries with good credit standing, such as Germany, would thus risk their rating by tying themselves to economically troubled countries such as Spain and Greece.

Germany, which currently borrows at a low 1.73% interest rate, could see that number rise.

Critics have said that Eurobonds would not pressure economically risky governments to get their budgets in order, but support is building, as is market pressure for action.

Eurobonds or e-bonds could relieve pressure on financially weak eurozone members and could also deter speculation and protect the euro, experts say.

A popular proposal would create a European Debt Agency to issue the guaranteed e-bonds at a uniform low interest rate.

These bonds would cover half of a nation's borrowing needs, while the other half would have to be assured by their own national debt instruments and without any EU guarantee.