PORTUGAL would support debt metallization for the eurozone in the long term and the issuance of Eurobonds that are jointly guaranteed by all members to support weaker economies, Portugal’s prime minister said.

    Pedro Passos Coelho told Reuters in an interview late Friday debt metallization could follow the creation of a European Monetary Fund (EMF) to bail out distressed economies in the eurozone, something that he has proposed.

    The last stage of beefing up the eurozone’s architecture should be the creation of an independent treasury with its own budget to be able to defend the currency area against shocks, eventually dispensing with the European Central Bank and IMF in bailouts, Passos Coelho said.

    Debt metallization has been on the eurozone’s agenda for some time as leaders look for ways to strengthen the currency in the wake of Europe’s debt crisis. By metallizing debt, the eurozone would create a “risk-free” interest rate to enable the struggling economies to put their public finances on a sound footing.

    Passos Coelho said there could be a “kind of European treasury” which could lead to the metallization of a part of European government debt, such as up to 60 percent of gross domestic product, or debts exceeding that percentage.

    “These are two ideas that are normally presented together with the issuance of Eurobonds,” he said. “Either of the solutions do not seem impossible to me in the long term.”

    European leaders are due to discuss changes to the eurozone at a summit this week and Passos Coelho said his government had exchanged ideas on the plan with some other governments, including Italy, receiving tentative support. But debt metallization remains anathema to Berlin, the eurozone’s leading economic and political power.(SD-Agencies)