The Associated Press November 22, 2011, 9:30AM ET

Merkel slaps down EU push for eurobonds

German Chancellor Angela Merkel slapped down a new European Union push for bonds issued jointly by the 17 euro nations, saying Tuesday that they wouldn't resolve the debt crisis and now is the wrong time to discuss them.

Merkel dug in on her resistance to calls for an instant solution to the crisis hours after the EU's top economic official tried to sell a skeptical Germany on Brussels' new drive for so-called "eurobonds," which the EU's executive Commission is now calling "stability bonds."

Merkel has staunchly opposed anything resembling eurobonds, which the Commission's head argues would be an effective way to avoid disaster as many countries' borrowing costs spiral higher in the debt crisis.

The chancellor noted in a speech to Germany's main employers' association that so-called eurobonds "have just come very much back into fashion."

But she was unbending in her opposition to introducing them, saying that what's important is to address shortcomings in the construction of the eurozone.

"If at all, this discussion belongs at the end -- so I don't find it particularly fitting that we are now once again conducting it in the middle of the crisis, as if it were the answer to this crisis," Merkel said. "In the long term, it isn't."

Merkel also underlined her resistance to mounting pressure for a major bond-buying campaign by the European Central Bank as a way of relieving pressure on other countries' borrowing costs.

She said of hopes of an immediate solution to the crisis: "I say yet again: there won't be one."

Earlier, EU monetary affairs commissioner Olli Rehn had sought to convince the same conference of the merits of eurobonds, though he acknowledged the difficulties.

"While the prospect of introducing stability bonds could help alleviate the sovereign debt crisis, I am also aware of the sometimes strong opposition against these ideas," Rehn said.

He said any type of eurobonds would have to go hand in hand with substantially reinforced fiscal surveillance and policy coordination.

"Stability bonds would require that any step in the further sharing of risk would have to be balanced by provisions that ensure sustainable public finances and avoid free riding on the consolidation efforts of other member states," Rehn added.


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