Saturday

1st Oct 2016

Report: Germany wants 'elite' bonds for six euro-countries

Berlin is planning to team up with five other top-rated eurozone countries and issue joint 'elite' bonds, Die Welt newspaper reported Monday.

The 'elite' bonds would be issued by Germany, France, Finland, the Netherlands, Luxembourg and Austria - all with triple A assessments from credit rating agencies - in a bid to raise more money at low interest rates for themselves and, under strict conditions, for the troubled southern euro-countries, EU diplomats involved in the negotiations said.

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  • 'Elite' bonds instead of eurobonds? (Photo: bundeskanzlerin.de)

The UK is also being "closely" consulted on the matter, the article said.

The Sunday edition of the paper had reported that Chancellor Angela Merkel and French President Nicolas Sarkozy are involved in secret talks on creating a tighter fiscal union with the euro-area, a club of the 'super-Europeans' willing to abide by the strict budget discipline proscribed by Berlin.

An intergovernmental treaty, modelled on the one for the border-free Schengen area, would be signed by those willing to partake in this kind of set-up, not necessarily all 17 euro-states.

In what looks like a major shift by Merkel, the plans suggest that the European Central Bank would have a stronger role in rescuing countries.

The Welt am Sonntag's report suggests the chancellor is willing to soften its position on ECB lending after Berlin last week was unable to auction a third of its long-term bonds, suggesting Germany is also at risk of being sucked into the crisis.

Another possible plan would see a speeding up of the creation of the eurozone's permanent bail-out fund, the European Stability Mechanism (ESM), currently planned for mid-2013.

The ECB could lend to the ESM, which in turn would prop up troubled countries and circumvent Germany's concerns about the central bank's independence.

Finance minister Wolfgang Schaeuble, who is travelling to Brussels on Tuesday to meet his fellow eurozone ministers, has denied any such plans are in the making. “We want to solve these things within the treaties," he said, according to the Irish Times' Berlin correspondent.

In Paris meanwhile, Sarkozy's cabinet has been busy explaining to media that the mooted Franco-German plans are in no way going to give the European Commission "supra-national powers", as reported by Journal du Dimanche.

But it admitted in a press release that "intrusive" powers are being considered "for the surveillance of a country like Greece," adding that this would be done by the EU commission or the council of eurozone countries with advice from the commission.

"Not even Germany demands supra-national powers for the Commission," the statement claimed, after Journal du Dimanche speculated that Merkel convinced Sarkozy to put in place an economic government and reinforced budgetary discipline using the commission.

New EU rules on financial products in limbo

A feud between MEPs and the EU commission is threatening to derail financial services regulation that would protect consumers from misleading investment products.

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