BERLIN — Chancellor Angela Merkel of Germany balked at committing to direct sovereign debt purchases through the euro-area bailout fund, pushing back on calls by the bloc’s leaders, who backed the measure as a way to ease the crisis.
Such a move, while legally possible, “is not up for debate” at present, Merkel said Wednesday.
President Francois Hollande of France championed the idea of using the European Stability Mechanism to purchase indebted countries’ bonds as a way to counter rising yields. Just returned from the Group of 20 summit in Los Cabos, Mexico, Merkel said: “I haven’t heard about such things.”
“There is no concrete planning that I know about, but there is the possibility of purchasing sovereign bonds on the secondary market,” Merkel told reporters. “But this is a purely theoretical statement about the legal situation.”
Merkel’s noncommittal stance opened a fresh conflict as euro finance ministers met Wednesday and Prime Minister Mario Monti of Italy hosts a four-way summit in Rome Thursday.
Hollande prodded Germany to use the European Union’s permanent rescue fund to buy debt from countries such as Italy, which have taken steps to revamp their economies.
The proposal is for “virtuous countries like Italy,” which have improved their public finances, to “be able to get funding for their debt” at better rates than countries that didn’t make the same efforts, Hollande said at the G-20.
The French president said he expects to discuss the bond-buying proposal with his German, Spanish, and Italian counterparts when they meet in Rome.
Merkel also said that she expects a request from Spain in the coming days for aid for its banks. The country may ask for as much as $127 billion.