June 25th, 2012
03:42 PM GMT
London (CNN) – Eurobonds will be back on the agenda at the euro crisis summit later this week, with one source telling me there will be “more than twenty different types” under discussion.
Such bonds - a way to raise cash backed by all 17 eurozone countries – have long been floated as one panacea to the bloc's financial crisis but the idea has been stymied by political resistance, largely from German chancellor Angela Merkel.
But as the crisis continues to rumble on the introduction of eurobonds looks increasingly likely. And the ascendancy of eurobond advocate Francois Hollande, France’s new president, has thrown weight behind the idea.
European council president Herman Van Rompuy is due to issue a draft communiqué to member states Monday night outlining the ideas, and also plans for a growth pact agreed last week.
The communiqué will also detail the creation of a banking union with deposit insurance - although my source tells me questions are already being raised around how this would be contained to the eurozone’s 17 nations rather than the European Union’s 27.
“Mr Van Rompuy's aim is to get the leaders to get closer towards a commitment on these options by the end of the year,” the source noted.
But investors are already skeptical. Frederick Shepperd, chief executive of Shepperd Investors AG, in Zurich, told me there is a “real disconnect” between the financial options of central banks and the need to boost euro economies.
“The financial solutions treat the symptoms and not the real cause, just like the solutions for Wall Street did not help as solve the problems of Main Street," he said.
The pressure to create a unified financial solution had the potential to create even more problems, Shepperd warned.
"There might be public pressure to support greater integration of Europe, but there is a major voter trend away from integration. Politics and economics are at an impasse and politicians may not be able to make the proper decisions to avoid an even greater crisis.”
While the world is clamoring for leaders to “do the right thing,” that right thing depends on who you talk to, Shepperd said. “There is not an economic and political consensus in Europe at this time," he added.
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