20 August 2011

Bloomberg: Van Rompuy opposes common bonds until euro region budgets converge further

European Union President, Herman van Rompuy, ruled out issuing common bonds as a cure for the debt crisis, saying any joint borrowing should wait until European economies and budgets are better aligned.

With three countries drawing financial aid and national debts ranging from 6.6 per cent of GDP in Estonia to 142.8 per cent in Greece, this is the wrong time to set up a single borrowing agency, van Rompuy said in an interview broadcast on Belgium’s RTBF radio today. “We could have eurobonds on the day when there is genuine budgetary convergence, the day when everyone is in balance or virtually in balance”, he said.

Van Rompuy sided with Germany and France in damping down the eurobond debate, saying the answer to the crisis lies in executing plans like last month’s decision to give more flexibility to the bloc’s €440 billion rescue fund. He urged governments to ratify the plan quickly so the fund can buy bonds in the secondary market.

Van Rompuy said a six-part package of laws to strengthen Europe’s rules on national deficits is likely to be passed next month. Europe’s next move will be to streamline its communications policy to defuse public disagreements between governments that undermine market confidence, Van Rompuy said, previewing proposals he will make at an October summit.

Full article

© Bloomberg