Greece's Prime Minister George Papandreou said Friday that, despite Germany's opposition to the proposal, Athens was still seeking support for common euro zone bonds that he said would help countries cope with high borrowing costs.
According to a Reuters report, Jean-Claude Juncker, chairman of the euro zone finance ministers, has previously supported the idea of the bonds as a way to expedite fiscal integration. Germany, on the other hand, is firmly opposed, saying that such bonds would reduce the compulsion of countries within the euro zone to commit to fiscal responsibility in tackling budget deficits. Germnay also fears that its own borrowing costs would rise as a result.
In the Ethnosnewspaper on Friday, Papandreou said, "We are fighting a battle at a world and European level. A battle to deal with the weaknesses of an international banking system, which has still difficulties and is not financing the real economy, and imbalances in the euro zone, where some are borrowing more expensively than others and as a result they are always less competitive."
He added, "In this battle we are forming allies in proposals such as the common euro bonds."
Greece had suffered from that very plight in 2010 as its cost to borrow money escalated and shut it out of the capital markets. The situation sparked the debt crisis, and Athens was compelled to seek a bailout package from the International Monetary Fund (IMF) and fellow euro zone members.
On Thursday, German Finance Minister Wolfgang Schaeuble had repeated his opposition to the bonds, saying in the German newspaper Tagesspiegel, "The higher yield level expressed in so-called spreads is both incentive and sanction [to have a stable fiscal policy]." Germany's borrowing costs are currently the lowest in the European Union (EU).
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