Hollande Pushes EU to Talk about Joint Euro Bonds

HollandeFrench President Francois Hollande, standing firm in the face of stiff German opposition, said on Wednesday that European leaders should broach the possibility of jointly-issued euro bonds and that no option to resolve the bloc’s crisis should be taboo.

Hollande, due to join other European Union leaders later on Wednesday for talks over dinner, said all options should be put on the table because the gathering was about exchanging views before a decision-making summit at the end of June.

“This is not about entering into conflict with others,” the Socialist president told a news conference in Paris. “Everyone should go into this in the best spirit.”

Hollande, who held the news conference jointly with Spanish Prime Minister Mariano Rajoy after the two met, reiterated that he was committed to debt and deficit reduction but that helping economic growth was a necessary part of that objective.

He said he would raise a panoply of ideas including the role of the European Central Bank and the European Financial Stability Fund on the one hand as well as euro bonds.

“It’s not just about project bonds, which will also be proposed,” he said at the news conference at the presidential Elysee Palace, referring to the idea of the EU backing bonds issued by managers of infrastructure projects.

“It’s about thinking of a means of financing that will allow all countries that have made the necessary effort to fix their public finances to gain access to financing at the lowest rates possible, sheltered from speculation or doubt in some markets,” he said.

“Is it acceptable that some sovereign debt has to be refinanced at rates of 6 percent when others, admittedly better regarded, can access funding at rates of close to zero in the same monetary and budgetary zone?” he asked.

Germany sold bonds offering investors no regular interest rate payments for the first time on Wednesday. Strong demand for the bonds underscored investors’ desperation to find a safe place to park their euros.

By contrast, investors trading in the open market were seeking returns of around 4.2 percent and 3.6 percent respectively on comparable bonds issued by vulnerable debtors Spain and Italy.

Hollande vowed during the campaign that swept him to power in a vote on May 6 where he unseated Nicolas Sarkozy that he would seek changes to a European pact on deficit reduction to add more concrete commitments to shore up economic growth.

Hollande said at the news conference in Paris that he also intended to address the role of the ECB and EFSF and banking liquidity in the talks with other European leaders.

“The top priority is injecting liquidity into the European financial system to ensure that European banks, all European banks, can be consolidated,” he said.

“It’s at the end of June that we must produce solutions and do so together but it would be a shame to not go all the way on proposals,” he said in defense of his position ahead of the EU meeting on Wednesday.

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