October 20, 2011
Doubts grew about the effectiveness of a key proposal for stemming Europe's deepening debt crisis as it emerged that officials have ruled out a plan for the euro-zone's bailout fund to directly guarantee bond issues.
Instead, European officials are discussing a scenario in which governments issuing bonds would borrow from the bailout fund to guarantee a portion of the bond issues—a move that would increase debts for already troubled economies.
Pressure is rising ahead of a weekend summit of European leaders billed as critical to stemming the region's deepening debt crisis. French President Nicolas Sarkozy on Wednesday—after visiting his wife, Carla Bruni, in a Paris clinic shortly before the birth of their first child—made an unexpected trip to Frankfurt to meet with German Chancellor Angela Merkel and other top European officials gathered at a farewell celebration for European Central Bank President Jean-Claude Trichet.
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