Euro bonds would cost Germany billions - magazine

BERLIN Sat Aug 20, 2011 11:32am EDT

BERLIN Aug 20 (Reuters) - Issuing joint euro bonds would cost Germany billions of euros each year, according to finance ministry experts cited in a magazine on Saturday.

"In the first year it would mean 2.5 billion euros of additional interest rate costs for Finance Minister Wolfgang Schaeuble's budget, in the second year the costs would be twice that," Der Spiegel magazine wrote in a statement ahead of the release.

In the tenth year, the additional cost would be between 20-25 billion euros, according to finance ministry calculations, Der Spiegel said.

The calculations were based on euro bonds with 0.8 percentage points higher interest rates than for German sovereign bonds, the magazine said, in line with bonds the European Central Bank currently sells to finance its part in the euro zone bailout scheme.

Germany has led resistance to calls that the euro currency bloc should issue common euro bonds and expand its bailout fund to calm repeated market sellofs of government bonds and bank shares of vulnerable debtor countries.

German Chancellor Angela Merkel on Friday reiterated her criticism of proposals for euro zone bonds, saying this was a "slippery slope" that would probably leave everyone worse off.

Schaeuble also rebuffed the idea at his ministry's open day on Saturday, saying Europe could not have uniform interest rates on its debt unless its fiscal policy was also made collectively. (Reporting by Annika Breidthardt; editing by James Jukwey)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (1)
JonnyP wrote:
To me as a citizen of the United States of America it appears Europe should trend into a unified EU with one fiscal policy. The transition would be bumpy. If EU countries could begin to see themselves as EU citizens a better government and balanced approach to economics would prevail. A devided EU may fall behind and fall victem to outside global influences they cannot control.

Aug 20, 2011 2:26pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.