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Commission set to unveil eurobond plan

Wednesday 23 November 2011 - by will.henley@gfsnews.com

The European Commission is set to formally unveil its plans for the issuance of eurobonds as part of a package of measures aimed to strengthen economic governance in the European Union.

European Commission president José Manuel Barroso and economic and monetary affairs commissioner Olli Rehn will announce the proposal at a press conference at lunchtime.

Rehn, who was recently also named commission vice-president, will then detail it to the European Parliament's economic and monetary affairs committee later on Wednesday.

However the plan is likely to face stiff resistance from Germany's government. Chancellor Angela Merkel has opposed the scheme, saying eurobonds are "exactly the wrong answer" and would lead to a "debt union and not a stability union".

Sharon Bowles, chair of the Econ committee, on Wednesday morning said she welcomed the "unorthodox" eurobond idea, but warned that the plan would do little to solve the EU's immediate problems. "These options are plausible for two years down the line, but what about now?



"Germany cannot afford to bail out Italy and Spain and the ECB refuses to be lender of last resort. Yet the ECB and Germany appear to be looking for an unusual type of Pareto optimum: putting the maximum pressure on countries to reform up to the moment where they go bust.

"This approach has broken the eurozone sovereign debt market," Bowles said, adding that the EU should consider an interim option such as one year 'eurobills'.

Barroso outlined the eurobond idea last week at a debate at the EU Parliament in Strasbourg. "I believe that euro stability bonds will be seen as natural when we achieve our goal of reinforced governance and of course discipline and convergence in the euro area," he said.

"There will be a concrete demonstration of the principles of responsibility and solidarity."


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