Germany's foreign minister said on Friday a process had begun to consider how financially strong euro zone nations could help weaker members of the currency union, though it was too early to say what measures might be taken.
Frank-Walter Steinmeier, who is also vice-chancellor in the ruling coalition, made his comments after a report by Der Spiegel magazine said that the German finance ministry was looking at possible rescue measures for other euro zone states.
One option being studied was a credit-worthy country issuing a "bilateral bond" on behalf of another state in need, the magazine reported. A second option was for solvent countries together to issue a joint bond.
The finance ministry denied in a statement that it was working on any such steps, but Steinmeier confirmed that the process of considering such help had begun.
"Especially an economy like the German one obviously relies on the economy of its neighbouring states and neighbouring markets not suffering too much," said Steinmeier, a Social Democrat who will challenge Chancellor Angela Merkel in this year's federal election.
"That's why a process is now starting to consider to what extent support via … the economically strong countries of the euro zone countries can happen. This is a process that has just started, and of which cannot yet be said to what extent measures can be taken," Steinmeier added.
His comments follow a widening in euro zone bond yield spreads, reflecting a divergence in the finances of the nations in the currency bloc as they borrow large sums of money to shield their economies from the global financial crisis.
German Finance Minister Peer Steinbrueck said in a speech on Monday that although EU rules said countries should not help each other within the currency area, all members of the bloc would have to help "if it came to a serious situation".
In the same speech he mentioned Ireland as being in a "very difficult situation". Other euro zone countries like Greece have also seen their bond spreads widen, reflecting worries about rising budget deficits.
Germany is the EU's benchmark issuer of sovereign debt.
A Finance Ministry spokesman said widening euro-zone bond spreads had been discussed within forums like the Eurogroup and Ecofin but that he was not aware of any plans for financially strong nations in the bloc to help weaker neighbours with bond issues.
BENCHMARK ISSUER
Der Spiegel reported that in addition to the two bond options, the finance ministry was looking at an EU rescue package which could either be a stand-alone measure or be organised with the International Monetary Fund.
The ministry said the report did "not represent the facts", adding: "The German finance ministry is not working on such concepts."
The ministry added that wider bond spreads within the euro zone were an issue for the European Commission, European Central Bank and Eurogroup.
The EU's budget rules remained important, as well as structural reforms to improve competitiveness, the ministry said.
"Everything beyond this are theoretical considerations," it added.
Steinbrueck said last month it was not in Germany's interest to back the issuance of joint European sovereign debt.
But Der Spiegel, which did not name any sources, said Steinbrueck did not believe that heavily indebted states could achieve a turnaround without help from other countries.
As a precaution, he had asked officials at his ministry to run through some rescue measure options, the magazine said.
