Common Euro bond idea lacks wide support – Greek minister

TOKYO, Jan 31 (BestGrowthStock) – The idea of issuing a common euro
zone bond is an interesting one but lacks wide support within
the euro zone at this point, Greece’s finance minister was
quoted by Japan’s Nikkei business daily as saying.

Financial markets have been gripped by the fear Athens will
not be able to service its heavy debt, putting pressure on the
euro and raising questions over whether fellow euro-zone member
states would come to Greece’s rescue.

Greek and European Union officials on Friday insisted there
was no chance of a Greek default or an EU bailout and that
Athens would do whatever it takes to cut its burgeoning
deficit. [ID:nLDE60S0XN]

“It is not something Greece has proposed, but it is an
interesting proposal,” the Nikkei’s Sunday edition quoted
Greece’s finance minister, George Papaconstantinou, as saying
in an interview in Davos, referring to the idea of a euro zone
common bond.

“It is difficult amid a crisis. At this point, it does not
have widespread support within the euro zone,” he added.

When the idea of a common euro zone bond was discussed in
early 2009 there was strong opposition to it from Germany,
France and the Netherlands and indifference on the part of many
others. [ID:nLDE60R2G5]

Earlier this month, European Central Bank Executive Board
member Juergen Stark criticised the idea of issuing a joint
euro zone bond to give countries in difficulty another
financing option.

“Euro bonds (euro zone common bond) would not address
structural problems… Responsible countries would be
punished,” Stark said at the time in a panel discussion on
German radio station SWR2. [ID:nnLDE60E23X]

Worries over Greece’s fiscal problems have caused Greek
bond yields to soar, and pushed up the yield spread on 10-year
Greek bonds over German paper to a record high of 405 basis
points on Thursday. [ID:nLDE60R2M8]

Papaconstantinou told Reuters on Friday it would be
disastrous if his country had to finance all its maturing debt
this year at current rates.

But he added that there was no immediate need for further
funds and that he expected debt spreads over benchmark German
bonds to narrow once markets saw the government’s
deficit-cutting programme being implemented. [ID:nLDE60S1OB]


(Reporting by Masayuki Kitano; Editing by David Fox)

Common Euro bond idea lacks wide support – Greek minister