Vienna - AFP
Austria came out on Sunday in favour of pan-eurozone government bond issues and the European Central Bank stepping in to act formally as the currency area\'s ultimate rescuer. In decisions that leave Germany ever more isolated in its opposition to the two demands most frequently cited as short and long-term solutions to the euro debt crisis, Triple A-rated Austria reversed its position to back common debt issuance across borders. Speaking on the sidelines of the European Socialist Party congress in Brussels on Sunday, Chancellor Werner Faymann told Austrian news agency APA that the concept of eurobonds was already de facto accepted through the existence of the European Financial Stability Facility (EFSF). It has committed to loans to Greece, Ireland and Portugal under international bailouts for all three aimed at preventing the spread of sovereign debt contagion in the eurozone. \"We must continue with what has already been started with the European bailout fund,\" Faymann said. \"It\'s already a premise, a sort of eurobond in practice -- what does it matter what name we give its final form,\" he added. In a blow for Berlin -- Austria is one of only five other Triple A-rated eurozone states, with France already in danger of losing its star status on credit markets -- Faymann also advocated a greater role for the ECB as the debt crisis, buying up more of the bonds issued by stressed euro governments in Italy, Spain or elsewhere. \"The European Central Bank could perform a more powerful role, as in the United States,\" he said. \"It could itself buy states\' bonds.\" Taken together, Faymann said the eurozone would then be \"going in the right direction, provided we define a careful framework\" to avoid moral hazard, the idea that states will suddenly rush to run up more debt than they can pay back, safe in the knowledge they have guaranteed rescue funds to call on. He said the aim of rules governing the precise circumstances in which the ECB would act were needed \"so as not to lead us into chaos, but rather that it brings real security\" at a time when borrowing costs for all eurozone states are rising, and even Germany has struggled to raise finance on commercial markets.