Merkel Adviser Calls Political Union Unrealistic, FAZ Says

A political union in Europe that allows for the joint issue of bonds is unrealistic, Claudia Buch, a member of Chancellor Angela Merkel’s council of economic advisers, told Frankfurter Allgemeine Zeitung.

“Euro bonds in the framework of a political union, with joint control and a surrendering of fiscal powers, would be theoretically an alternative in the long term,” Buch told the newspaper. “But this way seems politically unrealistic.”

Buch, an economist at the University of Tuebingen who replaced Beatrice Weder di Mauro on the panel earlier this year, promoted the debt-redemption fund as an alternative to European Central Bank monetization of sovereign debt, FAZ said.

The fund, which would mutualize euro-area debt exceeding 60 percent of member states’ economic output in return for strict conditions, would offer a temporary solution until the bloc stabilize its finances, Buch told the newspaper.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net