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Germany rules out “pooling Eurozone debt”

in International Business

Germany rules out “pooling Eurozone debt”

Germany Deputy Finance Minister Steffen Kampeter rejected plans to pool Eurozone debt calling debt a “national responsibility”.

“I don’t see any strategies where we socialise and redistribute the bad political decisions made by some who are over-indebted,” said Mr. Kampeter.

Germany’s decision may disappoint investors on international markets who were relying on Germany to resolve the Eurozone debt crisis.

That may disappoint investors on international markets whose hopes had been raised by reports that the Germany might be inching toward the compromise mutualisation plan.

The plan, from Germany’s so-called “wise men” group of private economic experts, would let countries with debt above 60% of GDP such as Greece issue eurobonds for debt above that level, which would then be paid down over a maximum of 25 years.

In effect, indebted governments struggling to borrow at affordable rates in the commercial markets would be able to take advantage of lower borrowing costs offered to countries within this joint bond, such as Germany.

It was put forward as an alternative to full eurobonds, which would involve eurozone economies clubbing together to issue bonds representing all 17 member nations.

Germany Chancellor Angerla Merkel had warned the world leaders before that they should not overestimate Germany’s ability to resolve the Eurozone crisis, saying that the country’s options for rescuing the Eurozone are limited.

Mrs Merkel called for more regulatory powers for the European Central Bank, and repeated that growth should not be financed by more debt.

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