German against common euro bonds

BERLIN: Germany remains against any collectivisation of euro zone governments' debt and the creation of common euro bonds is impossible while countries run separate economic policy, Finance Minister Wolfgang Schaeuble has said.

Pressure is growing on euro zone leaders to take a more radical approach to the euro zone's debt crisis ahead of a potentially vital meeting of German Chancellor Angela Merkel and French President Nicolas Sarkozy next week.

Italian Economy Minister Giulio Tremonti renewed his call for a collective euro zone bond on Saturday.

"It still stands: there will be no collectivisation of debt and there will be no unlimited support," Schaeuble was quoted as telling Der Spiegel magazine in an interview to be published on Sunday. "There are certain support mechanisms that we are developing further with strict conditions."

"The member states that need our solidarity must reduce their deficits and reform their economies with at times very tough measures," he said.

Der Spiegel said Schaeuble also ruled out the issuance of euro-bonds unless certain hurdles are removed.

"I rule out Eurobonds for as long as member states conduct their own financial policies and we need differing interest rates so that there are possibilities of incentives and sanctions to force fiscal solidity," he said.

"Without that kind of solidity, there is no foundation for a joint currency," Schaeuble added.

Copyright Reuters, 2011