(For more on the sovereign-debt crisis, see EXT4.)
Feb. 15 (Bloomberg) -- The European Parliament 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 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 can foster stability in the euro area in the medium term,” the 754-seat Parliament said in the resolution approved today in Strasbourg, France. The assembly said it is “deeply concerned at 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 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 over the ensuing year and prompted work as of last July on a second Greek bailout that includes losses for private holders of Greek bonds.
The commission signaled yesterday that it was in no rush to take extra steps toward euro bonds, highlighting the political roadblock in Germany to such a move.
“The possible challenges remain daunting,” Neelie Kroes, a commission vice president, told the 27-nation Parliament. “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 common debt issuance after closing consultations with interested parties on Jan. 8. 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.
Echoing the commission, the EU Parliament said “a sustainable fiscal framework” needs to be in place before joint bond sales. The assembly 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, Andrew Clapham
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