European financial markets yesterday took a short break from their long downward plunge as European Commission President Jose Manwel Barroso announced that the EU executive will shortly be presenting proposals for the establishment of eurozone bonds.

The idea that the eurozone should start issuing common bonds underwritten by all the 17-euro area members to sustain its debt levels, particularly those of troubled member states, has been on the cards for a long time and is seen as one of the options available on the table in order to stifle the current sovereign debt crisis.

MEPs have long been advocating such a move.

However, despite the Commission’s efforts, this will not be a straight forward exercise as many member states, particularly Germany, are against the idea as this will push up their own borrowing costs. The same applied to all other AAA rated member states like France, Austria and the Netherlands. Furthermore, the possible changes needed to the EU Treaty to implement such a move could take years to materialise.

While promising that the Commission will at least try to start the debate on eurobonds, Mr Barroso warned that this will still not be enough to solve the ongoing economic crisis and the real solution is “more integration”.

Depicting the current situation as very serious, Mr Barroso warned that the EU is facing its most serious challenge in a generation.

“This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration itself,” Mr Barroso said.

He also urged all the eurozone member states to come together and try to work out solutions without taking individual initiatives.

Mr Barroso also called for faster implementation of the agreement reached last July during an extraordinary eurozone summit where member states agreed on a second Greek bailout and to reinforce the current temporary rescue fund known as the European Financial and Stability Fund (EFSF).

All member states have to ratify this agreement before coming into force. “Solid, feasible and concrete proposals have been made. They have been agreed upon. But they have taken too long and have not yet been fully delivered,” Mr Barroso told MEPs.

European leaders have been battling to get on top of the debt crisis for more than 18 months with little success. Their latest move, adopted in July, was to strengthen their €440 billion bailout fund, the EFSF, by allowing it to buy bonds in the secondary market and to lend pre-emptively to governments in distress.

Malta is expected to ratify this agreement in October when Parliament reconvenes following the summer recess. However some other member states, particularly Slovakia and Finland, are having problems to keep up with their commitments due to divergences in the government coalition.