France, Germany, EU Forge Plan-debt burden crisis to Share Investor

Germany and France have forged new rules for the euro crisis is intended to make investors share of the burden of any bailout plan after 2013, German government spokesman said Steffen Seibert.

The proposal, presented at a meeting of European finance ministers in Brussels today, introduce "collective action clauses" for debt issued after a temporary crisis center expires in 2013, said a French official who briefed reporters in Paris. These clauses allow bondholders to change the terms of bond contracts.

Bondholders will not automatically be required to take the losses, a position that contrasts with the recent call by German Chancellor, Angela Merkel, require investors to share costs with taxpayer bailout. The losses are determined on a case by case basis with the participation of the International Monetary Fund, the French official said.

"The terms offered to investors are not that markets do not know in other currency areas," said Seibert. "The plan is no surprise to the markets."

Merkel spoke today with French President Nicolas Sarkozy, President of the European Union, Herman Van Rompuy, Jean-Claude Juncker, head of group finance ministers of the eurozone, the European Commission Jose Barroso and European Central Bank President Jean-Claude Trichet.

Trichet and Juncker had criticized Merkel's demand that the losses of investors require a bailout. His comments helped trigger a sell-off in bonds from Ireland to Portugal. Merkel was also criticized by Spain and Greece, which said his comments risked derailing the efforts of the indebted nations of the euro, reducing the deficit.