Eurobonds: Germany rules out fiscal unity

15th August 2011

The Financial Times quotes Wolfgang Schäuble the German finance minister saying: "I rule out eurobonds for as long as member states conduct their own financial policies and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity."

It also quotes a French official. "Eurobonds would require a much more determined integration of budgetary policy. We do not have that today. It could be a long-term project, but you cannot have eurobonds and at the same time national economic and budgetary policies."

That is not a view Soros shares. Here Spiegel magazine interviews him about his views on eurobonds.

"I think there is only one choice. It is not a question of whether Europe needs a common currency. The euro exists, and if it broke apart all hell would break loose. Germany has to make it work. To make it work, you have got to allow the members of the eurozone to be able to refinance the bulk of their debt on reasonable terms. So you need this dirty word, the "euro bonds".

But when you study what it involves to have eurobonds, you really have a problem because each European country remains in control of its own fiscal policy, and you have to rely on the country to meet its financial obligations."

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