Josef Ackermann, the former Deutsche Bank AG chief, said joint debt sales would force Germany to assume the funding burden and would take pressure off other euro-area nations to implement changes as they battle a worsening crisis.
“I’m against euro bonds,” Ackermann told Bloomberg News in an interview yesterday in Washington. “If we do it right now, it allows maybe the funding with Germany guaranteeing up to 27 percent,” and “that would mean that maybe the pressure from other countries to do the necessary reforms would be taken away and that would be wrong.”
The European Commission has kept alive the debate over common borrowing by euro-area governments. German Chancellor Angela Merkel has rejected euro-area debt sharing, telling members of her party that “under no circumstances” would she agree to euro bonds. The clash over euro bonds pits better-off countries led by Germany against France, Belgium, Italy, Luxembourg and peripheral countries relying on European aid or at risk of needing it.
“The people in Germany would not support that and secondly there are also some constitutional limits to do it because of the no bail-out clause,” said Ackermann, who joined Zurich Insurance Group AG as chairman this year. He said euro bonds would increase burden-sharing and “we can only do that if we have more fiscal integration.”
The euro fell, ending two days of gains against the U.S. dollar, as Spanish Budget Minister Cristobal Montoro said the nation faces difficulties in accessing capital markets. The 17-nation currency dropped 0.5 percent to $1.2437 at 1:10 p.m. New York time.
The disagreement between France and Germany over whether to jointly sell debt centers on when to introduce the securities and not whether to sell them, French European Union Affairs Minister Bernard Cazeneuve told newspaper La Stampa in an interview published today.
France wants to begin the process now as a way to overcome the debt crisis, while Germany would back the bonds once conditions improve as a way to signal that Europe has overcome the crisis, Cazeneuve said in the interview.
AAA-rated countries such as Germany and Finland have said that joint borrowing would force up their own interest rates and give deficit-prone states an incentive to go on spending.
Separately, Ackermann said the European Central Bank has taken adequate measures to stem the crisis. “They have gone far enough for the time being,” he said.
The ECB has kept interest rates at a record low of 1 percent and flooded banks with more than 1 trillion euros ($1.24 trillion) in cheap three-year loans to keep credit flowing to the real economy.