German Chancellor Angela Merkel continued to insist on Friday that joint euro zone bonds were not an option, nor was using the European Central Bank (ECB) as lender of last resort, and that the way to solve the eurozone debt crisis was through tight control of budgets.
Bloomberg reported that Merkel dismissed calls for quick action and instead compared the crisis to a marathon, saying, “Marathon runners often say that a marathon gets especially tough and strenuous after about 35 kilometers [22 miles]. But they also say you can last the whole course if you’re aware of the magnitude of the task from the start.”
Merkel also said that the role of the ECB was different from those of either the Bank of England or the Federal Reserve. Instead she stressed, along with French President Nicolas Sarkozy, the need for closer ties among eurozone nations and the need for tighter enforcement of budgets designed to extricate troubled nations from their fiscal woes.
Despite the fact that markets and theU.S.are pressingEuropefor faster action to resolve the crisis, Merkel advocated the slow track, saying that nations that broke rules concerning their budgets—keeping debt within 60% of GDP and deficits within 3%—could be sued in the European Court of Justice. “The lessons are very simple,” she said, “rules must be adhered to, adherence must be monitored, non-adherence must have consequences.” She added that leaders must “overcome fundamental flaws in the construction of the euro area.”
Regarding the oft-broached subject of joint euro-area bonds, Merkel dismissed them as “unthinkable” while governments retain national control over their own budgets. She said in the report, “You have to differentiate between credible enforcement powers and joint European control over revenue and spending. And as long as this is so, joint liability for the debt of others is unthinkable. That also takes care of the debate over so-called euro bonds for now.”