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European Commission Signals Slow-Track Approach to Euro Bonds

February 14, 2012

(For more on the sovereign-debt crisis, see EXT4.)

Feb. 14 (Bloomberg) -- The European Commission signaled it was in no rush to take further steps toward joint bond sales by euro-area governments, highlighting the political roadblock in Germany to such a move to tackle the debt crisis.

“The possible challenges remain daunting,” Neelie Kroes, a vice president of the commission, the European Union’s regulatory arm, told the EU Parliament today in Strasbourg, France. “There are many wide technical topics to be analyzed before any definitive decisions are taken. And we must take the time to do so, as nothing should be left to chance.”

The commission is considering the way forward for possible joint debt issuance in the euro area after outlining options for it in a Nov. 23 paper and closing consultations with interested parties on Jan. 8.

The German government of Chancellor Angela Merkel opposes the introduction of common euro bonds, which have support in southern nations including Greece and Italy, federalist-leaning Luxembourg and Belgium and the European Parliament.

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 has 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 and prompted work on a second Greek bailout that includes losses for private holders of Greek bonds.

In its paper three months ago 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.

‘Quite Limited’

“Euro bonds without fiscal consolidation will not work,” Kroes said today. Standing in for EU Economic and Monetary Affairs Commissioner Olli Rehn, she said the feedback from the commission’s consultations was “quite limited” with “only 18” replies.

“These replies came mostly from private citizens,” Kroes said. “I would hesitate to consider this feedback as representative.”

The 754-seat EU Parliament is due to vote tomorrow on a non-binding resolution on euro bonds. In a text in December that will be the basis of the vote by the full assembly, its economic and monetary affairs committee urged the commission “to come forward rapidly” with proposals tied to the introduction of euro bonds.

--Editors: Andrew Atkinson, John Simpson

To contact the reporter on this story: Jonathan Stearns in Strasbourg, France at

To contact the editor responsible for this story: James Hertling at

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