Angela Merkel said she had settled a dispute between her and Luxembourg's Prime Minister Jean-Claude Juncker over euro zone bonds, the German Chancellor said in a newspaper interview on Thursday.
Merkel outlined in the Bild why she was against his idea of issuing joint euro zone bonds and she also appealed for closer cooperation on economic and financial policies in Europe ahead of an EU summit, which runs until Friday.
"Jean-Claude Juncker and I had a long telephone conversation and cleared up the issue a while ago," Merkel said. "With so much at stake, the emotions sometimes get involved."
Juncker is the euro zone finance ministers' chairman. In Thursday's Handelsblatt newspaper he said he intended to raise the topic of joint euro zone bonds, an idea he proposed earlier this month, although he did not expect a decision.
The proposal for common euro zone bonds — dubbed E-bonds — was rebuffed by Germany and France, even though it was later supported by other EU politicians. Juncker had accused Germany of rejecting the proposal without having studied the detail.
Euro zone bonds would effectively mean the 16 euro zone countries sharing credit risk and debt issuance and would expose Germany's credit standing to the influence of riskier peripheral EU countries such as Greece.
Merkel also said that Germans' savings were safe despite the euro crisis. She added that Greece and Ireland are only being helped with guarantees right now and that not a single euro has been lost.
"All the experts confirm that Greece and Ireland can shoulder the debt burdens, the interest rates and payments, over the long haul," Merkel said.
"With the so-called euro bonds, the weaknesses in Europe wouldn't be removed but instead spread upon everyone," she said. "And indebted states wouldn't have any pressure any more to get their budgets in order."
Merkel repeated many of the things she had said in a speech to parliament on Wednesday. She said a guarantee to German savers that she and former Finance Minister Peer Steinbrueck had made two years ago was still valid.
"What Mr. Steinbrueck and I promised more than two years ago is still valid and it has proven itself," she said.
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