THE EUROPEAN Parliament will press top officials next week for firmer action to tackle the region’s debt crisis, with common bonds and a stronger euro zone rescue fund likely to anchor the debate.

European Central Bank president Jean-Claude Trichet will be questioned on Monday alongside Eurogroup chairman Jean-Claude Juncker and Olli Rehn, the European commissioner for economic and monetary affairs, in an extraordinary session of parliament’s economic and monetary affairs committee.

“It’s going to be a pretty free-ranging and open debate but we also need to get down to some hard specifics,” said chairwoman of the committee Sharon Bowles.

“The situation has got worse over the summer because the markets wouldn’t wait while euro zone governments went on holiday, so the whole solution is now more expensive than it was and is more complicated.”

While the parliament has no power to compel Mr Trichet, Mr Juncker or Mr Rehn to take action, it has at times acted as a conscience for the euro zone during the crisis, calling ahead of time for leaders to take steps that later have either been explored or implemented.

The parliament is a strong proponent of euro area bonds – euro-denominated debt jointly issued and underwritten by all 17 euro zone member states to enable sovereign risk to be shared out across the whole region. If implemented, such a move would have the effect of raising Berlin’s cost of funding in order to bring down the cost for higher-risk states such as Greece, Ireland, Portugal, Spain and Italy.

Separately, a senior Finnish finance official said that collateral remained an “absolute precondition” for Finland to take part in the euro zone’s second bailout package for Greece.

An EU news website earlier reported that Finland had abandoned its demands for collateral under pressure from Germany. But the official, speaking on condition of anonymity, said that was not the case. “There seems to have been some misunderstanding . . . Collateral is an absolute precondition for Finland to take part in the package,” he said. “Discussions are continuing to find a way that makes it possible to have that collateral.”

Senior euro zone finance officials spoke to discuss the details of the arrangement and decide whether only Finland will receive collateral for its loans or whether a formula can be worked out for other euro zone members also.

While Finland had wanted to receive cash as collateral – which would have required Greece to deposit about €500 million in an escrow account to guarantee Finland’s €1.4 billion loan to Athens – that requirement has been dropped. – (Reuters)