BRUSSELS Jan 27 European establishments are engaged on a safety that may be backed by euro zone authorities bonds, however which might not result in the mutualisation of euro zone debt, European Commission Vice President Valdis Dombrovskis advised a information convention on Friday.

“(This) is ongoing work in the European Systemic Risk Board …(which) is already for some time working on the concept of a European safe asset, meaning the securitisation of EU member states sovereign bonds,” Dombrovskis stated.

“The Commission as a member of the ESRB is of course participating in this work. We find this concept useful since it helps to address the issue of bank-sovereign loops,” he stated.

He stated such a European Safe Asset would offer funding alternatives for banks and different traders and make sure that banks don’t maintain too many bonds of only one sovereign.

“To be very clear, the concept of the work does not foresee mutualisation of those bonds,” he stated, in a bid to appease considerations in Berlin that such any instrument would make Germany accountable for the money owed of others. (Reporting By Jan Strupczewski and Francesco Guarascio)

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