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German Government Said to Shift on Redemption Pact

Date : 06/13/2012 @ 10:00PM
Source : Dow Jones News

German Government Said to Shift on Redemption Pact

The German government has begun opening the door to shared debts for the first time in a profound change of policy, agreeing to explore proposals for a €2.3 trillion ($2.9 trillion) stabilization fund in order to stop the euro zone's crisis escalating out of control, U.K. daily The Telegraph reported Thursday.

Officials in Berlin say privately that Chancellor Angela Merkel is willing to drop her vehement opposition to plans for a "European Redemption Pact," a "sinking fund" that would pay down excess sovereign debt in the euro zone, The Telegraph said.

"It is conceivable so long as there is proper supervision of tax revenues," said a source in the chancellor's office. The official warned that there would be no "master plan" or major breakthrough at the EU summit later this month, The Telegraph said.

Mrs. Merkel rejected the Redemption Pact last November as "totally impossible," even though it was drafted by Germany's Council of Economic Experts--or "Five Wise Men"--and is widely viewed as the only viable route out of the current impasse, The Telegraph said.

Dow Jones Newswires; dennis.baker@dowjones.com



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