German Finance Minister Wolfgang Schaeuble recently revealed the details of his national redemption fund proposal. The plan, which works to solve the sovereign debt crisis, will be presented at the EU leader meeting planned for next week.
According to the proposal, states would place a piece of their debt in a designated national fund to pay off over the next two decades, while at the same time committing to new reforms in order to keep debt levels under control.
The plan is supported by Chancellor Angela Merkel. The belief is it will inspire confidence, since states would be showing their efforts to significantly limit debt levels.
“We need a redemption fund in every single country of the euro zone,” Schaeuble said. “Each of these countries should put into a special fund that part of its debt which exceed 60% of its GDP, and should pay that off with tax revenues. Over a period of 20 years, the debt should be reduced to 60%.”