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French Report Suggests Creating European Treasury

Sarkozy has officially rallied behind German leader Angela Merkel in opposing the idea of joint euro zone bonds but he has also said the idea could one day resurface if European economic policy becomes better integrated. Common sovereign bonds would drastically help peripheral euro zone nations by enabling them to borrow more cheaply, and should help ward off future debt crises in the bloc but they could ramp up yields for countries like Germany and France. The report presented to Sarkozy suggests the shift towards a pan-European Treasury should start with Germany and France, and then widen thereafter to more euro zone countries that respect the fiscal constraints of the EU's Stability and Growth Pact. It did not go into much detail on how the process would work and suggested it was something to think about for the end of the current decade. "We propose considering the possibility for the medium term of creating a body that would be put in charge of shared management of the debt of euro zone states, which is the logical follow-on to creation of the single currency," it says.

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