Germany stuck to its call for rewriting European Union treaties to increase penalties for euro-area deficit violators, saying investors must foot part of the bill for any future debt crisis.
Chancellor Angela Merkel is seeking assent by all 27 EU governments and will take her case to this week’s summit of EU leaders in Brussels, said a German government official who briefed reporters on condition of anonymity because the negotiations will take place behind closed doors. The aim is to put investors in sovereign bonds, not taxpayers, first in line to accept a loss if a euro-area government defaults or restructures its debt, the official said in Berlin. The amendment may require just two lines, the official said, declining to elaborate on what the language might look like.
Treaty changes are “of enormous importance” to safeguard the euro and avoid an extension of the European Financial Stability Facility, the 750 billion-euro ($1 trillion) financial backstop set up in May, when it expires in 2013, Merkel said Oct. 20. As the EU seeks to gird against a repeat of this year’s debt crisis, Germany also wants overhauled euro rules to threaten persistent deficit violators with a suspension of their EU voting rights, the official said.
For more: Germany Insists on Changes to Euro Treaty as EU Leaders Prepare to Meet - Bloomberg
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