Germany renewed its opposition to growing calls for a move towards bonds that are jointly issued by eurozone members yesterday, with the German Chancellor, Angela Merkel, saying that so-called eurobonds were "exactly the wrong answer" to the currency union's sovereign debt crisis.
The rejection follows a fortnight of turmoil on the world markets, with investors increasingly anxious about what they see as the lack of political will to solve the eurozone debt crisis. Last week also saw the Wall Street investment bank Morgan Stanley highlighting Europe's "slow and insufficient response to the sovereign crisis" as one of the reasons for a downgrade of its economic-growth forecasts.
But Ms Merkel rebuffed the clamour for eurobonds as a solution to the Continent's problems.
"They lead us to a debt union and not a stability union," she told German public television yesterday. Instead, Ms Merkel said Europe needed to move towards more economic co-operation.
"The eurozone has to work even more closely together but we also have to work together closely within the Europe of 27," she said. "Our currency is not substantiated by a political union. Now the task is to make the euro strong through more economic co-operation and, especially, more commitment."
Earlier, her finance minister, Wolfgang Schuble, had also opposed the idea. Speaking at his ministry's open day on Saturday, Mr Schuble said: "As long as we don't collectivise financial policy, we also cannot have a uniform interest rate level. The different rate levels are the incentive to run a solid economy or the punishment if you are not running it properly."
Ms Merkel's resistance echoed her stance at talks with the French President, Nicolas Sarkozy, last week.
On the other side of the …