The Council is an independent body which provides economic advice to the German government and Bundestag. The proposed plans could feature among the discussions among heads of state at the 9 December European summit. Describing the plans, Prof Dr Christoph Schmidt, one of the five Council members, said that the idea was to "provide a bridge between the short-term fire-fighting needs and the longer-term ones of better economic governance".
The plan would see debt of eurozone Member States in excess of 60 per cent of GDP hived off into a €2.3 trillion fund which would be redeemed within 25 years. According to Prof Schmidt, the fund would lower interest rates on the repayment of this debt and would buy time, thereby providing a calm environment in which to work on long term solutions. Furthermore, it would not require a Treaty change and was expected to go down well with the German Constitutional Court, he added.
Most MEPs were convinced by the idea, primarily because it could be implemented speedily, could reduce interest rates for the most stressed economies, and could create an incentive culture rather than merely imposing a punishment regime.
The main concern raised was that countries currently financing themselves at low rates would be reluctant to participate. To this, Prof Schmidt repeatedly replied that the discussion had moved on from one exclusively based on interest rate fairness to one based on the survival of the euro. "This will not be a choice made only on the basis of achieving low interest rates but a choice in favour of the survival of the euro. This issue is currently being ignored in Germany", Prof Schmidt said.
Press release
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