According to an article in today’s Financial Times, the European sovereign debt markets continue to experience considerable stress, in spite of recent efforts by European fiscal and monetary authorities.
The authors, Jean-Claude Juncker (prime minister of Luxembourg, and chairman of the Eurozone finance ministers group) and Giullio Tremonti (Finance Minister of Italy), propose that Europe formulates a strong, systemic response to the crisis, which will send a clear message to global markets and European citizens of our political commitment to economic and monetary union, and the irreversibility of the euro.
At the heart of their proposal to Europe’s finance ministers gathered in Brussels to find ways to fight the debt crisis,
they are urging the creation of new pan-European bonds to provide a much-needed confidence boost in the euro, and help reduce borrowing costs.
Supporters of the “E-bonds” concept believe they could help protect eurozone countries from speculation and attract new capital flows into the region.
However, the idea has powerful opposition in Germany. Wolfgang Schaeuble is the German Finance minister said the proposal “was unworkable without fundamental changes in the European Union”.
Germany believes the current system, under which country’s issue their own bonds, imposes some fiscal discipline on members – and punishes them when they step own of line.
The original purpose of the finance ministers’ meeting was to approve a draft directive aimed a strengthening cooperation on tax evasion and tax fraud.
