May 31, 2012 / 8:51 AM / 5 years ago

Euro zone needs deeper integration to survive: EU's Rehn

BRUSSELS (Reuters) - Europe’s single currency must be supported by responsible fiscal policies and closer cooperation between countries in the euro zone to survive and prosper, the EU’s top economic official said on Thursday.

European Economic and Monetary Affairs Commissioner Olli Rehn holds a news conference on the Economic Governance Package at the Commission's Headquarters in Brussels May 30, 2012. REUTERS/Sebastien Pirlet

“We need a genuine stability culture and a much upgraded common capacity to contain common contagion,” EU Economic and Monetary Affairs Commissioner Olli Rehn told a conference.

“This is the case, at least if we want to avoid a disintegration of the euro zone and instead make the euro succeed,” he said.

But Rehn cautioned that going straight to a discussion of issuing bonds jointly underwritten by all euro zone member states, known as euro bonds, would be a “false debate”.

He urged countries first to bring budgetary policies more into line and move towards fiscal union.

“We will not be able to overcome our problems by focusing on a joint issuance of public debt without simultaneous fiscal sustainability, nor will we be able to anchor a stability culture in the euro zone without significantly pooling the burden of adjustment,” Rehn said, in a call for European solidarity.

“Pulling these goals by force (together) is indeed a false debate,” he said.

French President Francois Hollande has spoken in favor of joint euro bonds, but Germany is opposed to them, saying they could only be considered at the end of a process of deeper fiscal and economic integration.

Reporting by Jan Strupczewski and Robin Emmott; editing by Rex Merrifield

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