Monti looks to weak countries’ debt for solution
Italian Premier Mario Monti is pushing an idea to fight the eurozone crisis by using European financial aid funds to buy debt in weaker countries, media reports said yesterday.
He will put forward his proposal at talks in Rome tomorrow.
At the close of the G20 summit in Mexico, which focused on tackling the debt crisis, Monti said that European Union leaders were considering the use of rescue funds as a mechanism to bring down borrowing costs, the reports said.
The idea is “to strengthen eurozone stability through mechanisms which would reward virtues by making it so that countries in line with financial programmes, like Italy,” benefit from “less anomalous spread levels,” he said.
Spain in particular is struggling with record debt borrowing levels, after a recent emergency bailout for its struggling banks failed to reassure investors.
While Monti has been working hard to protect Italy from being sucked deeper into the eurozone crisis with a series of structural reforms and austerity measures, nervous markets continue to penalise Italian debt, forcing the treasury to pay high borrowing rates when it issues bonds.
The hypothesis is “completely separate from bailout plans,” and will be discussed among the EU’s big four – Germany, France, Italy and Spain – at talks in Rome tomorrow, ahead of an EU summit on June 29-29, he said.
“Italy has floated an idea which deserves consideration, we’ll speak about it at Rome,” French President Francois Hollande said, according to the Corriere della Sera newspaper.
German Chancellor Angela Merkel, however, was reportedly unimpressed.
Monti also repeated that “it’s wrong to talk about a bailout for Italy,” after foreign media described the debt-buying plan to ease borrowing costs as “a Spain and Italy bailout deal”.
Last week Monti, a former EU commissioner, had ruled out a bailout, “now or in the future” for Italy, as the country came into the crisis line of fire once more.