Germany's Merkel says 'nein' to eurobonds

Just hours before heading to Paris to bridge gaps with French President Francois Hollande, Merkel told the German parliament that pooling debt in the euro area was “the wrong way” and would “repeat the euro's original error.”

She said: “Guarantees and controls must go hand-in-hand. There can only be joint liabilities when sufficient controls have been put in place.”

Merkel insisted: “Apart from the fact that instruments like eurobonds, eurobills, debt redemption schemes and much more are not compatible with the constitution in Germany, I consider them wrong and counterproductive.”Merkel's Paris meeting is the latest in a rush of shuttle diplomacy to prepare for the Thursday and Friday summit in Brussels that will seek to tackle the short-term crisis and thrash out measures to prevent it from occurring again.

The centerpiece of the summit is likely to be a repacking of existing accords into a “growth pact” hailed as amounting to 1 percent of European output, or about 130 billion euros (US$162 billion), which Merkel said was a “strong signal.”

But leaders will also seek to define the shape of the embattled eurozone for the next decade, seeking closer integration in the form of a banking union and handing powers to European level for countries' financial sectors and budgets.

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