Senior Finnish government officials will travel to Italy to discuss how to help Italy get better access to credit markets, Finnish public broadcaster YLE reported yesterday.
“Finnish Secretary of State for EU Affairs Kare Halonen and [finance] ministry undersecretary Martti Hetemaeki are flying to Rome on Tuesday. The purpose is to discuss if Italy could in some way adopt the collateralized debt securities proposed by Finland,” YLE wrote on its Web site.
At an EU summit in June, Finland proposed the idea of collateralized bonds, in which the state provides a loan guarantee, for example, by earmarking property tax revenue or debt.
The EU swiftly dismissed the proposal but Italian Prime Minister Mario Monti, who visited Helsinki earlier this month, is apparently now interested in the idea, according to YLE.
Monti has previously warned the rest of the eurozone that Italy must be allowed breathing space on the markets to have any chance of pulling away from the debt crisis brink and resisting contagion from other weaker members such as Spain.
Italy, eurozone’s third-largest economy and one of the biggest markets for sovereign bonds, is wallowing in deep recession and Italians have seen a series of austerity packages, tax hikes and reforms to try to tackle the country’s debt.
Meanwhile, German Chancellor Angela Merkel on Sunday warned that “every day” counts in efforts by debt-wracked Greece to comply with its commitments and safeguard its eurozone membership.
“In this context, every day counts now to really strengthen efforts and apply what has been promised,” Merkel said when asked about how confident she was in Greek Prime Minister Antonis Samaras.
Merkel said that much confidence had been lost over the past two-and-a-half years and reiterated the need to now wait for a progress report, due next month, by Greece’s international creditors.
“Like others I have said to the Greek prime minister that there is still a lot to do,” she said.
As part of a 130 billion euro (US$161 billion) bailout package from the EU and the IMF, Greece has committed to sweeping reforms and some 11.5 billion euros of cuts next year and 2014.
A positive report from the so-called troika — the European Commission, IMF and the European Central Bank — is essential for Greece to get the next 31.5 billion euro installment of funds to keep it afloat.
After some members of her center-right coalition have spoken publicly of a possible Greek exit from the eurozone or have appeared skeptical over a solution, Merkel said that Europe was in a “decisive” phase.
“We are at the moment in a very decisive phase in fighting the European debt crisis,” she said.