With the ECB continuing to hold back from buying eurozone member’s bonds calls are getting louder, especially in the light of Greece possibly leaving the euro and Spain needing a bailout, for the bank to intervene.
The ECB fears it has already taken enough risks onto its balance sheet, and would rather countries restructure and reform.
“Time is running out,” said Baader Bank analyst Robert Halver. “We have crises everywhere: in Spain the banking crisis, in Greece the fear of an exit from the euro zone, and in Germany, the rescue mechanism, the fiscal compact which is still not approved. We slowly but surely need results.”
Germany’s Angela Merkel has now taken a deep breath and is pushing for a giant leap forward in fiscal integration, with a central authority, and a co-ordinated approach to labour market, social security, and tax reforms. If states refuse the loss of sovereignity that implies, Germany will block eurobonds or any ‘banking union’.
With an EU summit at the end of June it appears matters are coming to a head, and very quickly. The summit may even produce a ‘road map’ towards fiscal union. As one German government official said in Berlin on Monday, “Do our partners want more Europe, or just more German money?”