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More criticism of eurobonds

May 25, 2012

The president of Germany's central bank has warned against viewing eurobonds as a suitable instrument to overcome the current financial crisis. He said debt could not be brought down by even more debt.

Bundesbank chief Jens Weidmann
Image: dapd

German Bundesbank President Jens Weidmann refuses to accept jointly issued eurobonds as the right answer to the eurozone's current financial woes.

"I don't think we'll be successful in trying to resolve the crisis with more debt outside regular budgets," Weidmann told Friday's edition of the French newspaper Le Monde.

He was responding to calls by France and other nations for joint eurobonds which would have the effect of roping stronger economies, like Germany's, into guaranteeing the debt of weaker countries, such as Greek and Spain.

Why be gullible?

"You don't give your credit card to someone, if you can't control their spending," the central bank chief quipped in the interview. He indicated that eurobonds could one day become an end point on the path to real budgetary union, but would be no good as a quick fix or even a sustainable remedy right now.

Weidmann said the issuing of eurobonds would in the long run require member states to transfer more sovereignty from national governments to Brussels.

"Even in countries where governments are demanding eurobonds, like France, I see no public debate or any popular support for the transfer of sovereignty that would surely be required for such a move," Weidmann stated.

hg/gb  (Reuters, dpa)