(For more on the sovereign-debt crisis, see EXT4.)
Dec. 20 (Bloomberg) -- A European Parliament panel urged further steps toward joint bond sales by euro-area nations, highlighting growing political concerns over the region’s two- year-old debt crisis.
The European Union assembly’s economic committee pressed EU regulators “to come forward rapidly” with proposals tied to the introduction of common euro bonds, which the German government opposes. The non-binding resolution responds to a Nov. 23 paper by the European Commission, the EU’s regulatory arm, on options for joint debt issuance, also called “stability bonds.”
“The prospect of stability bonds could foster stability in the euro area in the medium term,” the committee said in the resolution approved today in Brussels and due to go to the full 754-seat EU assembly early next year. The committee said it is “deeply concerned by the continuous strains on the euro-area sovereign bond markets reflected in widening spreads, high volatility and vulnerability to speculative attacks over the last two years.”
The idea of bonds sold jointly by the euro area’s 17 nations remains alive because unprecedented support by governments and the European Central Bank have failed to stamp out debt concerns that began in Greece in late 2009 and now threaten Spain and Italy. The troubles led Greece to seek an initial rescue in April 2010, pushed Ireland and Portugal into aid programs over the ensuing year and prompted a second Greek bailout in October.
In its paper last month outlining three possibilities for euro bonds, the commission said two of the options would probably involve the lengthy process of changing the EU treaty and all of them would require reinforced fiscal oversight. Consultations on the paper with interested parties are due to end on Jan. 8, 2012, after which the commission will recommend the way forward for possible common debt issuance.
Echoing the commission, the Parliament committee said “a sustainable fiscal framework” needs to be in place before joint bond sales. The committee also urged a “binding roadmap” for common debt issuance similar to the EU criteria in the 1990s for nations to introduce the euro.
--Editors: Jones Hayden, Peter Chapman
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