ATHENS Italian Prime Minister Mario Monti believes eurobonds will become a reality in the 17-nation euro zone and that Greece will remain in the single currency, he told a Greek newspaper on Saturday.
Monti, a respected former European commissioner who became Italy's prime minister in November, was known to be a supporter of eurobonds - unlike politicians in European Union paymaster Germany - but his comments were some of his strongest on the subject yet and looked like an attempt to sway Berlin.
"I believe we will have eurobonds in one form or another because our union is becoming all the more integrated," Monti told the Sunday edition of the To Vima newspaper in an interview made available on Saturday.
"However, it must be clear in our minds that issuing eurobonds is not a license to spend and burden others. On the contrary, it is an effort to rebuild Economic and Monetary Union on a more sound and credible basis," he said.
Germany has strongly resisted calls for the EU to issue common euro bonds to help member states like Greece that have been shut out of markets due to prohibitively expensive borrowing costs.
But Monti, who has been frustrated by a rise in Italy's borrowing costs since mid-March despite a 2012 budget deficit forecast well below the EU average, has been one of the most vocal backers of the idea.
However, Germany shows little sign of budging.
Asked whether it was time for Berlin to change its stance on the issue, Foreign Minister Guido Westerwelle told the same paper in a separate interview that issuing euro bonds would only create more debt and damage the bloc's competitiveness.
"(There would be more debt) because it would be easier for countries to borrow, to follow the 'easy' route," Westerwelle told the paper. "We cannot fund growth with new debt. Growth is achieved by strengthening competitiveness."
Monti said he believed Greece will stay in the euro but urged it to continue its efforts to build a strong economy, pointing to efforts by Portugal, Ireland and Italy to do just that.
In Greece, a political impasse after an inconclusive May 6 vote has forced the debt-laden country to hold a re-run of the parliamentary election on June 17. The vote is being widely seen as a referendum on the country's future in the euro zone.
Polls show the race between supporters and opponents of Greece's international bailout - seen as a guarantee of its membership of the euro zone - is too close to call.
EU leaders have warned Athens not to renounce the bailout, threatening to pull the plug on new funding if it does, a move that could trigger bankruptcy and its ignominious exit from the euro.
"I hope Greeks will vote to stay in the euro because this is the best guarantee for a steady future and welfare. I am certain that Greece will stay in the euro zone," Monti was quoted as saying.
He also told the paper that the European Central Bank had done an excellent job in helping the euro zone confront the crisis and said he was sure it would continue to do what it thought was necessary to safeguard the euro.
Asked whether he favored a Europe-wide system of deposit guarantees, Monti said:
"The euro zone has made it clear that it will do whatever is necessary to ensure stability and the future of the euro itself."
(Reporting by George Georgiopoulos; Editing by Andrew Osborn)