GERMANY’S BUNDESBANK has openly contradicted Chancellor Angela Merkel, saying EU leaders have already taken a “major step” towards pooling risk caused by “unsound finances” in the euro zone.

Yesterday’s blunt remark will ensure a lively reception for Ms Merkel at today’s emergency meeting of her Christian Democratic Union (CDU).

She was hoping to convince nervous backbenchers to back last month’s summit agreement by arguing that it, combined with further Franco-German proposals last week, would impose strict conditionality on further bailouts.

National debt will never be pooled at euro zone level, she has argued, until members adopt a strict rulebook allowing central budgetary oversight.

Yesterday the Bundesbank implied that, even before such a rulebook is agreed, the euro zone is already on its way “towards pooling risk” at European level arising from individual mistakes in national finances.

The Frankfurt-based bank said last month’s EU summit, including interest rate cuts for Ireland, had the potential to compromise the European Central Bank (ECB) and “weaken the foundations of the currency union”.

“By shifting extensive additional risks to the countries providing assistance and to their taxpayers, the euro area has taken a major step toward pooling risks arising from unsound public finances,” the Bundesbank says in its monthly report.

Unless July’s summit agreement was backed up by further budget and fiscal consolidation measures, the Bundesbank warned pressure would increase on the ECB to “loosen the common monetary policy”.

The statement marks the latest salvo from hawkish new Bundesbank president Jens Weidmann, Dr Merkel’s former economic adviser. Since taking the reins in Frankfurt, he has crossed swords with his former leader and opposed the ECB’s latest €36 billion bond-buying scheme.

Last month’s summit deal, if approved by parliaments, would empower the European Financial Stability Facility (EFSF) bailout fund to take over the ECB’s bond-buying role. The Bundesbank said the deal was not accompanied by adequate sanctions and measures for EU budgetary oversight.

The Bundesbank reiterated its proposal for an automatic three-year extension clause for euro zone government bonds. This would only be activated after a country sought help from the permanent European Stability Mechanism when it succeeds the EFSF in 2013.

The statement came on the heels of a warning from Austrian central banker Ewald Nowotny, a member of the ECB’s governing council, that parliamentary approval of EFSF reforms could yet fall foul of domestic politics.

Meanwhile, Finland’s bilateral loan-guarantee agreement with Greece for future loans continues to cause friction. “Such a bilateral accord may not be agreed to the detriment of the others,” said a German finance ministry spokesman.

Ratings agency Moody’s said the bilateral deal, which still requires approval of all 17 euro zone members, increases pressure on a “reticent” Paris and Berlin to present more concrete proposals on euro zone reform.

“The tentative Finnish-Greek collateral accord raises concerns about the willingness and ability of some euro area policymakers to implement measures that may prove necessary to preserve the stability of the European Monetary Union,” Moody’s said.

Finland’s new government, under domestic pressure, demanded collateral from Athens in exchange for further loan contributions. Last week’s announcement that Helsinki had secured guarantees prompted demands from Austria, Slovakia, Slovenia and the Netherlands for similar deals.

Ratings agencies see a dangerous precedent in the Finnish deal.