BERLIN (Reuters) - German Chancellor Angela Merkel believes her finance minister’s proposal of national funds in Europe for sovereign debt that is over 60 percent of gross domestic product could help restore confidence in the euro, her spokesman said on Friday.
“The chancellor welcomes the proposal of introducing national redemption funds as very interesting,” Steffen Seibert told a news conference.
Finance Minister Wolfgang Schaeuble said on Thursday he would like European countries to set up such funds to help build market confidence in the euro, and would make such a proposal at the European Union summit on December 9.
Seibert said such funds would make what progress countries are making on reducing their debt more transparent
“This is without a doubt a measure that could be appropriate for rebuilding investors’ confidence in markets,” Seibert said.
But Austria’s finance minister sounded a cautious note on Friday, warning that the proposal could be met with resistance from national parliaments.
“I do not know the details of the model yet but any proposal that results in gathering billions from taxpayers again will run into problems in national parliaments,” Austria’s Maria Fekter said at a conference in Hamburg.
Austria’s opposition far-right parties have opposed steps aimed at stabilizing the euro zone, such as beefing up the region’s rescue fund while the Greens have made their backing for some future measures conditional on changes to international finance rules and domestic policy.
Schaeuble’s proposal for redemption funds looks similar to an idea touted by the government’s independent “wise men” advisers on Nov 9, only their idea was to set up a European Redemption Pact with common liability. It was rejected by Merkel, who saw it creating constitutional problems.
But Schaeuble’s funds would be national, which would get around German concerns about the “communitarization” of debt between European states.
“We are convinced that joint responsibility for debt is currently the wrong signal. We are convinced that states have to reduce their debt to 60 percent (of GDP) on their own,” German Finance Ministry spokesman Martin Kotthaus said.
“The funds would be a symbol that says: ‘Yes, we have understood, sovereign debt is the core problem for confidence in the euro zone’.”
Reporting by Maria Sheahan and Stephen Brown in Berlin and Jan Schwarz in Hamburg. Editing by Jeremy Gaunt.