Germany’s Economics Minister Philipp Rösler said on Tuesday that he has reservations about a proposal put forward by Finnish Prime Minister Jyrki Katainen (Nat. Coalition Party).
Katainen recently suggested that European countries hit by the current economic crisis might be able to borrow money at a lower interest rate by issuing bonds backed up by state property.
Rösler was in Helsinki for a working visit on Tuesday.
Finland used such ‘covered bonds’ in the 1990s when it was struggling under a serious recession. The guarantees that were used were yields from state-supported ARAVA housing loans.
"This kind of model worked with Finland, but the model’s suitability on the European level still requires much study", Rösler said.
In his view a possible source of problems could be that the state cannot at the same time privatise property that it has set as collateral, which is something that many of the heavily-indebted countries are considering.