While Germany firmly opposes a proposal to issue common euro zone bonds the idea has been
championed by some European policymakers including Jean-Claude Juncker, chairman of the Eurogroup of euro zone finance ministers, as a way to step up fiscal integration.
Papandreou, in a Greek newspaper article, said Greece was fighting a battle to deal with imbalances in the euro zone, where higher borrowing costs faced by some countries due to investor concerns about their ability to cut high debt, were putting them at a competitive disadvantage.
Greece was effectively shut out of capital markets after its borrowing costs skyrocketed this year, sparking a debt crisis that shook the euro and forcing Athens to seek a 110-billion-euro ($145.7 billion) bailout from its euro zone peers and the International Monetary Fund.
"We are fighting a battle at a world and European level. A battle to deal with the weaknesses of an international banking system, which has still difficulties and is not financing the real economy, and imbalances in the euro zone, where some are borrowing more expensively than others and as a result they are always less competitive," Papandreou wrote in an article in the Ethnos newspaper published on Friday.
"In this battle we are forming allies in proposals such as the common euro bonds," he said.
Germany argues that the issue of common euro zone bonds, or E-bonds, would reduce market discipline on countries to tackle high budget deficits. It also fears that euro zone bonds would raise its own borrowing costs, the lowest in the European Union.
German Finance Minister Wolfgang Schaeuble reiterated on Thursday that the euro zone should not issue joint sovereign bonds to tackle future crises.
"The higher yield level expressed in so-called spreads is both incentive and sanction (to have a stable fiscal policy)," Schaeuble wrote in a contribution to the German Tagesspiegel newspaper.
(Reporting by George Georgiopoulos; Editing by Susan Fenton)
Reuters
http://www.reuters.com/article/idUSTRE6BU0PX20101231
