Brussels has unveiled its plans for euro bonds, seen by some as a miracle cure to the bloc’s debt crisis. Despite German opposition, the consultation launched by EU Commission President Jose Manuel Barroso aims to see if all 17 euro zone countries could raise cash together.
Out of the three options proposed, the first would completely eliminate individual euro countries borrowing on the bond markets on their own. Instead, all 17 nations would guarantee each others debts raising the cash collectively. Proposal number two envisages euro and national bonds working in conjunction. Like option one, the common paper would be underpinned by all. The final euro bond form proposed by the Commission would see a partial rather than a full guarantee of each of the 17 countries debts.
In return for this common security, Brussels says it would demand greater oversight of national budgets. Germany opposes the plan, fearing it would end up financially propping up the whole of the euro zone.
For Guy Verhofstadt, head of the EU Parliament’s Liberal group, a fourth and temporary euro bond option exists. This he believes would enable countries to slowly reduce their debts.
‘‘There has been a proposal, which I find interesting, to pool all those debts that go beyond 60 percent. The member countries of this temporary debt would not have received any bail outs from existing funds,’‘ he said.
In the past month, Italy, Spain and a number of core euro zone countries have all seen their borrowing costs soar.