The 17 members of Europe’s single currency should start jointly selling debt and find ways for the region’s banks to boost capital without burdening their national governments, Italian Prime Minister Mario Monti said.
Speaking by video link to a conference in Palermo, Monti said that euro bonds should be adopted in “a not very long time.”
The debate over debt sharing has exposed differences among the leaders of Europe’s biggest countries as they try to devise a common strategy to reduce borrowing costs. Chancellor Angela Merkel said on June 3 that “under no circumstances” would she agree to have Germany back euro bonds, while French President Francois Hollande and Monti have embraced the possibility of common debt.
It’s important that the proposal “remain on the table” and that it doesn’t become “an instrument of division between countries that must find a consensus rapidly and demonstrate their cohesion,” Monti said.
Monti is seeking to help broker a common strategy by hosting a meeting in Rome with Merkel, Hollande and Spanish Prime Minister Mariano Rajoy on June 22.
The euro area needs a deeper fiscal and financial union that would include regional oversight of lenders and collective bank deposit guarantees, the Italian premier also said.
“ We need to quickly act to put an end to the vicious circle between the vulnerability of the banking sector and the sovereign debt crisis,” he said.
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