The issuance of a common eurozone bond would cost Germany an additional at least 17 billion euros annually, writes the Frankfurter Allgemeine Zeitung (FAZ) on Monday.
The newspaper does not cite sources for this estimate, but states that the German Chancellor "can rely on this" at the upcoming summit taking place in Brussels at the end of the week. Merkel strongly opposes the proposal by Eurogroup President Jean-Claude Juncker for the issuance of common eurozone bonds, which is supported by several countries in southern Europe. France, the Netherlands, and other EU member states also oppose this proposal. The common bond would reduce borrowing costs for countries with debts and deficits whose borrowing is associated with higher risks in financial markets. However, it would increase costs for those adhering to strict fiscal discipline.
According to FAZ, the average yield on bonds, or interest rate, in the eurozone is 3.31 percent, while Germany currently pays an average of 1.73 percent when borrowing in financial markets. Merkel stated last Friday that "sharing interest rates and risks will not help in a structural sense." "It is more important to achieve greater cohesion in economic policy," she added during a joint press conference with French President Nicolas Sarkozy. Sarkozy agreed, stating that "responsibility of individual countries should be expanded, not reduced." (H)
