European Central Bank President Mario Draghi has renewed his call for greater economic integration within the eurozone.
Months after EU leaders agreed a fiscal pact to reintroduce discipline to national budgets, Draghi told an audience in Rome that European governments needed to make a “joint and irreversible” decision to safeguard the future of the eurozone.
“We are living in a crucial moment in the history of the EU. The sovereign debt crisis has shown up serious weaknesses in its institutional make-up,” said Draghi.
“We have reached a point in which the process of European integration needs a courageous leap of political imagination in order to survive.”
Italian Prime Minister Mario Monti told Italian television that most EU leaders who gathered in Brussels for an informal summit on Wednesday supported the idea of eurobonds, IOUs backed by the eurozone rather than individual countries.
German Chancellor Angela Merkel is against the plan: “It makes no sense to paper over everything with eurobonds, or similar instruments which may well seem to bring closer solidarity, only to end up with Europe in an even more difficult situation than we are in today.”
Berlin thinks eurobonds will lead to more reckless spending by southern European nations. They would also likely mean that Germany would face higher costs to borrow money.