MNI: EC Moscovici Wants Non-Eurobond EU Safe Assets

--Acknowledges German Reticence To Issue

--EC Commissioner Says Debate Needed On Eurozone Budget

By Tara Oakes

     BRUSSELS (MNI) - The European Union can get a safe asset for debt issuance

without the need for controversial Eurobonds, European Commissioner for

Economics and Financial Affairs told the Brookings Institution Monday.

     "In the medium-to-long term, it will be necessary to establish a genuine

European safe asset. This safe asset would ultimately be a new instrument for

issuing common debt," Pierre Moscovici said in Washington.

     "We are not talking about Eurobonds, which would be a red line for some

such as Germany, but could be a vehicle for future issuance," he added.

     His comments acknowledge the reticence in the bloc's biggest economy, whose

upcoming elections are awaited with baited breath for a further push on

increased Economic and Monetary Union.

     Latest polling by INSA, released Monday, still had current Chancellor

Angela Merkel's CDU/CSU topping results at 36%.

     If Merkel's party are returned at the head of a coalition, it will also be

a stamp of approval for Wolfgang Schaeuble's term as finance minister by a

public who eye debt mutualisation with suspicion. The Greek debt crisis

solidified a reticence to burden German taxpayers, which has endured since.

     Left-wing parties who were vocally more sympathetic to the plight of Greece

lack the numbers to form a majority government. Her main rivals -- and current

coalition partners -- the centre-left SPD suffered a 1.5% dip from the last INSA

figures published and now stand at 22%. The Greens and the far left Linke have

both benefitted, now at 7% and 11% respectively.

     Far-right AfD match the Greens at 11% and Merkel's preferred coalition

partners, the FDP, are at 9%, according to INSA.

     EZ BUDGET DEBATE

     Moscovici's speech did not flesh out plans for a preferred safe asset

option, but did indicate dissent among the ranks for EC President Juncker's

rejection of a Eurozone budget. 

     Instead, Juncker called for a "strong euro area budget line" within the

current bloc budget.

     "There can be other conceptions -- some could imagine that this could be

outside the EU budget, that it could have its own resources. So there will be a

debate there," Moscovici said.

     All eyes are on French President Emmanuel Macron's speech next week, where

he will lay out his own views for the future of the Eurozone in an attempt to

harness the renewed momentum Germany's elections will bring.

     "Whatever happens, you will have a strongly pro-European government in

Berlin," Moscovici said on the upcoming vote.

--MNI Brussels Bureau; +44 203-865-3851; email: tara.oakes@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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