2010-12-06 12:45:13
Eurozone finance ministers are to discuss creating a common government bond to help reduce borrowing costs.
The idea is one of several topics on the agenda at Monday evening's meeting, called to discuss Europe's debt crisis.
Supporters of "E-bonds" argue they would help protect eurozone countries from speculation and attract new capital flows into the region.
But Germany is thought to be sceptical of idea, which it believes could only work with closer European integration.
Key proponents of E-bonds are Jean-Claude Juncker, Luxembourg's prime minister and chairman of the eurozone finance ministers group, and Giulio Tremonti, Italy's finance minister.
They set out their argument in an article in the Financial Times, calling for the creation of a European Debt Agency (EDA) to issue what they say would be secure, highly-rated bonds.
They wrote: "The European Council could move as early as this month to create such an agency, with a mandate gradually to reach an amount of outstanding paper equivalent to 40% of the gross domestic product of the European Union and of each member state.
"We believe this proposal provides a strong, credible and timely response to the ongoing sovereign debt crisis," the pair wrote.
However, the idea appears to have powerful opposition in Germany, whose finance minister Wolfgang Schaeuble said it was unworkable "without fundamental changes" in the European Union.
Germany believes the current system, under which country's issue their own bonds, imposes some fiscal discipline on members - and punishes them when they step own of line.