The European Central Bank’s chief economist is arguing against the introduction of so-called eurobonds, which he says would reduce incentives for troubled countries to tackle budget problems.
Juergen Stark was quoted as telling Friday’s edition of Germany’s Handelsblatt newspaper that introducing joint eurozone bonds would be “a transfer of creditworthiness from stable, solid countries to states that have less solid state finances.”
Some, including the opposition in Stark’s native Germany, view at least the limited introduction of eurobonds as the logical solution to the eurozone debt crisis. But Chancellor Angela Merkel is against them — and her junior coalition partners, the market-oriented Free Democrats, oppose them particularly vehemently.
Critics argue that the bonds’ introduction would increase the borrowing costs of financially solid countries such as Germany, which went through painful economic reforms of its own in recent years, while allowing others to continue running up debt by reducing their financing costs.
“The incentive to tackle structural problems in budgets is reduced” by introducing joint bonds, Stark said — adding that their introduction without far deeper political integration would address “the symptoms and not the causes.”
He argued that they could make sense following “a political decision for stronger European integration
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