ECB's Nowotny: Eurozone bonds no "crisis instrument"

8. February. 2010
Reuters

Euro zone countries should not issue joint bonds as a way to allow less solvent countries to raise debt at the expense of others, European Central Bank Governing Council member Ewald Nowotny was quoted as saying.

"To issue euro zone bonds as something like a crisis instrument to allow less solid countries to raise cheaper debt at the expense of others, that's absolutely unrealistic and to be rejected," Nowotny told newspaper Wiener Zeitung.

However, he added in an interview that appeared Saturday that such joint bonds would be a good idea to make euro zone bonds more attractive compared with U.S. Treasuries, and that they would help make the euro currency more attractive.

"The Chinese central bank has a big interest in pan-European bonds rather than bonds of 'European provinces,' which is how they see individual European countries," he said. "This demand is currently not covered."

Nowotny also said that new countries wishing to adopt the euro needed to fulfill strict criteria, and that he saw good chances that Estonia would meet this test in 2011.

"This will be looked at very closely. I believe the chances that Estonia will fulfill the criteria can be seen as positive," he said when asked by the newspaper how realistic Estonia's euro adoption was for 2011.