German ministers rule out eurobonds
Source: Agencies |
August 16, 2011, Tuesday
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Print Edition
Print Edition
TWO German ministers reiterated their opposition to issuing jointly guaranteed European government bonds to help end the eurozone's crippling debt crisis, a day ahead of a summit between German Chancellor Angela Merkel and French President Nicolas Sarkozy.
The debate over eurobonds intensified as the European Central Bank reported that it spent 22 billion euros (US$32 billion) last week buying government bonds. Analysts think most of the money splashed out was spent driving down the bond interest yields of Spain and Italy, who had seen their borrowing costs ratchet up sharply in the preceding weeks.
The ECB's purchases were the biggest weekly amount the bank has made under the emergency measure, exceeding the 16.5 billion euros it laid out when it started buying Greek government debt in May 2010.
The program boosted Italian and Spanish bonds, pushing their prices up and interest yields, which move in the opposite direction, down. High bond yields were what drove Ireland, Portugal and Greece to seek bailouts from the European Union and the International Monetary Fund.
The ECB is temporarily shouldering the burden of fighting the crisis until national parliaments approve new powers for the EU's bailout so it can buy government bonds or help recapitalize banks if necessary.
Finance Minister Wolfgang Schaeuble told German news magazine Der Spiegel in its edition dated yesterday that eurobonds are out of the question as long as the currency zone's 17 nations still run their own budget policy. Merkel has long ruled out eurobonds, and Economy Minister Philipp Roesler joined the chorus yesterday, describing jointly guaranteed debt as "the wrong way" out of the crisis.
The debate over eurobonds intensified as the European Central Bank reported that it spent 22 billion euros (US$32 billion) last week buying government bonds. Analysts think most of the money splashed out was spent driving down the bond interest yields of Spain and Italy, who had seen their borrowing costs ratchet up sharply in the preceding weeks.
The ECB's purchases were the biggest weekly amount the bank has made under the emergency measure, exceeding the 16.5 billion euros it laid out when it started buying Greek government debt in May 2010.
The program boosted Italian and Spanish bonds, pushing their prices up and interest yields, which move in the opposite direction, down. High bond yields were what drove Ireland, Portugal and Greece to seek bailouts from the European Union and the International Monetary Fund.
The ECB is temporarily shouldering the burden of fighting the crisis until national parliaments approve new powers for the EU's bailout so it can buy government bonds or help recapitalize banks if necessary.
Finance Minister Wolfgang Schaeuble told German news magazine Der Spiegel in its edition dated yesterday that eurobonds are out of the question as long as the currency zone's 17 nations still run their own budget policy. Merkel has long ruled out eurobonds, and Economy Minister Philipp Roesler joined the chorus yesterday, describing jointly guaranteed debt as "the wrong way" out of the crisis.
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