Europe’s new budget treaty and permanent rescue facility are a first step “but not yet the final step” to the political union that Germany says is a prerequisite before it will agree to joint euro-area bonds, Deputy Finance Minister Steffen Kampeter said.
“We have always made clear that we completely oppose joint financing via euro bonds as long as fiscal policy in Europe is not integrated,” Kampeter said today in an interview with Deutschlandfunk radio. Introducing euro bonds now would mean bond interest that is “too low and takes the pressure off adjustments to the European economy.” For years, Greece had something similar to euro bonds and failed to seize the opportunity provided, “that’s why I believe that prescription comes at the wrong time and carries the wrong side-effects.”
“We need the fiscal pact, we need budget discipline, we need future-oriented investment and we need a commonly agreed policy for supply-side reforms” to make the economy more competitive, he said. “And whether in a decade or more a form of common financing is in place surely won’t be decided on Wednesday evening” when EU leaders meet.