German, French Finance Chiefs Meeting on Eurozone Discord

Posted May 21st, 2012 at 10:15 am (UTC-5)
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The German and French finance chiefs are meeting Monday to discuss their competing views about how to boost economic growth in the 17-nation euro currency bloc and resolve its governmental debt crisis.

Germany's finance minister, Wolfgang Schaeuble, is hosting his French counterpart, Pierre Moscovici, for talks in Berlin ahead of an informal summit of European Union leaders in Brussels on Wednesday. The meeting between the finance chiefs comes amid growing evidence that the German government is isolated in its focus on austerity measures aimed at cutting the deficits of the eurozone's debt-ridden governments.

New French President Francois Hollande is pushing for the creation of eurobonds, debt jointly issued by the currency bloc as a way to boost economic growth throughout the region and cut the cost of borrowing for weaker governments.

But Germany, with the eurozone's most robust economy and its lowest borrowing costs, has long resisted the sale of eurobonds. It says debtor governments like Greece, Italy and Spain and others must first control their spending. The German government says it is worried that jointly issued bonds would increase the very low interest rates Berlin pays.

Germany's deputy finance minister, Steffen Kampeter, told German radio Monday that eurobonds are “the wrong prescription at the wrong time with the wrong side-effects.”

The debate over eurozone economic policy is occurring as Greece's continued membership in the eurozone remains in question, with new national elections set for June 17 after a splintered vote earlier this month left the country's fractious parties unable to form a coalition government.

The caretaker Greek government said Friday that German Chancellor Angela Merkel proposed that Greece also stage a referendum at the same time about whether to stay in the eurozone. But Ms. Merkel's spokesman on Monday forcefully denied that she had made the suggestion.