Stark echoes Merkel attack on euro-bonds

 
Julian Harris
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EURO-BONDS were attacked by several leading Eurozone figures yesterday, in a fierce rebuttal of the plan currently under consideration by the European Commission.

Senior European Central Bank official Juergen Stark threw his weight behind compatriot Angela Merkel, stating: “Euro-bonds are no solution to the debt crisis. There are no simple, quick solutions to the debt crisis on the European level.” German Chancellor Merkel had earlier blasted the bonds as “absolutely wrong”.

“In order to bring about common interest rates, you need similar competitiveness levels, similar budget situations. You don’t get them by collectivising debts,” Merkel said.

Eurobonds would effectively result in the Eurozone’s core countries underwriting government debt from states such as Greece. The European Commission is weighing up its options on how the Eurozone might issue joint bonds, its President Jose Manuel Barroso said on Wednesday.

Merkel’s nervousness over the Eurozone crisis was amplified yesterday, when her party’s finance spokesman, Michael Meister, urged coalition partners to “not stoke any other debates” about Greece potentially leaving the Eurozone. Merkel insists that the Eurozone will stick together with all its current members.

Meanwhile, Spain and France sold nearly all the bonds they had offered at auctions yesterday. Spain’s Treasury sold one billion euros worth of a 2019 bond and 1.4bn and 1.5bn euros of two bonds maturing in April and October 2020 respectively.

The average yield on the 2019 bond was 4.969 per cent. On the April 2020 bond it was 5.006 per cent, and for the October 2020 bond it was 5.156 per cent. Spain will introduce a wealth tax in a bid to cut its deficit, a minister said yesterday.