The head of Germany’s central bank warned on Wednesday that a hasty move to pool European countries’ debt could endanger the continent’s currency union.
Germany faces increasing pressure to relent on its resistance to jointly issued eurobonds and other forms of debt-pooling ahead of a European Union summit on Thursday.
But Chancellor Angela Merkel is standing firm arguing it makes no sense to share liability for debt before Europe has undergone a long process of integration.
Berlin worries about being liable for others’ debts without being able to ensure that they push through economic reforms.
“All too many voices are calling in the current discussion for the fast introduction of comprehensive joint liability, either in the form of eurobonds, euro bills, deposit insurance, a debt redemption fund or other ‘innovative’ constructions,” Bundesbank chairman Jens Weidmann wrote in Wednesday’s edition of the daily Sueddeutsche Zeitung.
Mr. Weidmann argued that “an attempt to take the last step in deepening integration first through comprehensive common liability, and skip the others, threatens to endanger the currency union.”
Ms. Merkel was due to address Germany’s Parliament later Wednesday ahead of the EU summit.
On Tuesday, the 57-year-old chancellor told a caucus meeting of the Free Democrats, the junior partner in her governing coalition, that there won’t be full shared debt liability in Europe “as long as I live.”