In an interview to the German daily Bild am Sonntag, Merkel said Greece has distanced itself from collateral deals. She also warned that the creditworthiness of the country would suffer further if some loans are backed by collateral, while others are not.
Finland had struck a collateral deal with Greece. According to the proposed plan, Greece would deposit cash, in Finland's state account, for the amount of loan which Finland is guaranteeing. Countries including Austria, Slovenia, Slovakia, Estonia and the Netherlands raised doubts over the Greece-Finland deal. The dispute over the collateral deal has threatened to derail the new bailout program.
Merkel reiterated that euro bonds are a 'completely wrong way' to deal with the sovereign debt crisis in Eurozone. The root cause of the current crisis is debt. But the euro bonds, on the contrary, exacerbates the debt situation, she told the daily.
Responding to a question regarding Bundesbank's criticism of EU decisions for euro rescue such as joint liability without less control to individual governments, she said it was the duty of the bank to signal dangers.
The chancellor also believes the coalition would survive the legislative period and said the CDU's work with the FDP would last beyond the election in 2013, the daily reported. She is confident of convincing her coalition partners of the necessity of the proposed legislation and the strengthening of the stability of the Euro.
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