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A Plan Germany Could Actually Support

by The "State" Team

Something Germany Can Support

German Chancellor Angela Merkel has been heard saying “nein” an awful lot lately in response to all of the ideas being kicked around to save the Eurozone. Not surprisingly, Merkel reiterated her opposition to the idea of jointly issued Eurobonds on Tuesday. Her refusal to yield on this issue prompted Italy’s Mario Monti to talk about resigning if Eurobonds are not considered.

However, we should remember that Merkel has made it clear that some form of debt mutualization can be discussed – if, and only if – a deeper fiscal and political integration can be achieved. And apparently there is one plan that Merkel and Germany can support.

One of the schemes that has been under consideration was actually proposed back in November by Germany's own "wise men" and involves a European “redemption fund” that is backed by the gold reserves of the EU countries.

The idea is to create a fund that would take over the debt of all countries that break the EU’s debt-to-GDP limits. In exchange, these countries would have to adhere to strict economic oversight by the “fund.”

Since the fund would be backed by member states' gold reserves, it is estimated that it could be worth €2.3 trillion.

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