The European Commission is to propose an evolving system of eurozone bonds that could begin "relatively quickly" with a club-within-a-club and only partial debt-pooling, documents showed Sunday.
The EU executive will take the plunge on Wednesday with a legislative challenge to Germany to open the door on joint eurozone bonds and shared government guarantees seen as crucial to resolving the debt crisis.
The Commission's green paper on the introduction of Stability Bonds, alongside proposals to allow Brussels "technocrats" to intervene in the writing of national budgets, is designed to once and for all fix flaws in the 17-nation eurozone since its inception in 1999.
These have been mercilessly exposed during a nearly two-year crisis that has seen three bailouts already, with Spain, Italy and now France facing mounting pressure.
The "parallel" track envisaged, which would see pan-eurozone bonds reflect fiscal and economic convergence over the coming years, even dangles the option for only the best-run economies to gain entry to the system -- or the worst to be expelled.
According to documents first published in Italy's La Stampa and seen by AFP, the European Commission will outline three options for the bonds -- two of which would require a controversial change to the EU treaty, but one which could be started relatively quickly.
These would see either "joint and several," or in the third instance, "several but not joint" guarantees being provided by governments in the event a debtor defaults.
In a clear nod to Germany and other Triple-A rated states that would find themselves paying higher rates, the Commission says.
Of the preferred first two options, one would see full transfer of debt issuance to the common bond structure -- in other words, all German, Spanish and Estonian debt, for example, covered by each of the eurozone governments.