By DAVID GAUTHIER-VILLARS and WILLIAM HOROBIN PARIS—France will use an informal summit of European leaders in Brussels on Wednesday to propose that members of the euro zone start working on a new architecture of the currency bloc that would eventually allow for joint-debt issuance—the so-called euro-zone bonds. France's new President François Hollande, who founded his election campaign on a pledge to rekindle economic growth with European instruments, won't demand the immediate introduction of euro-zone bonds, French officials said ahead of the summit. "The idea is not to create euro bonds without a framework," one official said. "We need a road map." The French officials said Mr. Hollande's approach isn't in opposition to Germany's on the matter. German Chancellor Angela Merkel has voiced opposition to the immediate introduction of euro-zone bonds, but has repeatedly said the financial instrument could be a crowning achievement in a long process toward deeper fiscal integration. Mr. Hollande will propose that euro-zone countries begin working on the concrete steps of that process, the official said. Drawing a clear path toward integration will help stimulate confidence and investment in the monetary union, he said. The French officials, who spoke on condition of anonymity, declined to comment on Mr. Hollande's vision of a more deeply integrated Europe. Getting the French to agree on surrendering part of their sovereignty might prove difficult after a surge in support for protectionist parties in recent elections. In Brussels on Wednesday evening, European leaders are expected to discuss a range of short-term solutions aimed at revitalizing euro-zone economies, including boosting the shareholders' capital of the European Investment Bank—which helps finance large infrastructure projects. They will also discuss the possibility of issuing so-called project bonds, debt attached to specific projects, on a small scale. The idea would be to leverage European funds to be able to finance about €5 billion ($6.34 billion) in new investments through project bonds, the French official said. But Mr. Hollande will insist that such short-term mechanisms are "insufficient" to build a sustainable, more integrated European growth model, the official said. The French president will also use the Brussels meeting to address what he sees as a lack of coordination between national budgets and euro-zone monetary policy, often referred to as the policy mix. Such coordination has so far been difficult because Germany feared that a public debate on budget and monetary policies would encroach on the independence of the European Central Bank—whose mandate is to keep inflation in check. "We see that an absence of policy mix has led to the impasse we are in today," the official said.

Source