Edited and translated by People's Daily Online
As a core country in the euro zone, Germany's attitude toward the euro will have a direct bearing on the European debt crisis. Germany has recently changed its attitude about how core member states of the euro zone should bail out others in crisis.
Judging from the "three pillars" in the latest solution to the European debt crisis issued by the European Union, namely banks' 50 percent write-down in the face value of Greek government bonds, leveraging the European Financial Stability Facility and raising capital adequacy ratios of the banking sector, the core member states' bailout strategy has shifted from extending profitable loans to making a loss-making write-down and the bailout costs will be shared by all member states instead of being covered by debt-ridden member states through domestic reforms.
Germany's stable financial concepts have determined the progress of the European debt crisis bailout plan. Realizing Greece's default is inevitable, it chose the European Financial Stability Facility rather than highly expected Eurobonds, because the Eurobonds will cause all member states to bear the debt and make Germany's sovereign credit exposed to risks.
Instead, the European Financial Stability Facility acts as only a limited capital pool, and the expansion of its size is subject to the negotiations of member states, so it cannot serve as a lender of last resort like central banks and each member state has only limited responsibility and can better control risks.