German Chancellor Dr. Angela Merkel on Thursday, Feb 26, 2009, speaking on the 20th anniversary of an AIDS project in Berlin.

German Chancellor Dr. Angela Merkel on Thursday, called for global co-ordination of debt issuance to ensure that governments do not push up borrowing costs by competing against each other in the capital markets. The German leader also signalled, that her government could act under Article 100 of the Maastricht Treaty, allowing financial assistance to be given to countries such as Ireland, which are experiencing “difficulties caused by natural disasters or exceptional occurrences beyond its control.” Also on Thursday, ECB President Jean-Claude Trichet said in Dublin, that claims Ireland may default, are"absurd."

“Of course there is a certain interpretative room to manoeuvre in the stability and growth pact and a country like Ireland that has been hit quite hard by the banking crisis is clearly in a different situation to a country like Slovakia with fewer banks and where the distorting forces at work are weaker,” Merkel said  in remarks to reporters.“We have shown solidarity and that will remain so. We should use Sunday’s summit for member states affected to give an honest report of their situation.

“We will have to discuss the situation in each individual country. It all depends on whether we are able to speak openly and honestly about the situation because there are a lot of rumours flying around.”

Merkel said the growing divergence among Eurozone members in the cost of financing their debt was a “difficult” situation that required joint remedial action.

The Financial Times estimates, that a record $3,000bn (€2,350bn, £2,090bn) of debt is expected to be raised in government bonds this year – three times that in 2008.

“The many government bonds that have to be placed at the moment by various states is leading to difficult situations around the globe,” Merkel said.

“Imagine an extreme case if all states were to issue huge bonds on the same day, then states would be competing for good credit conditions with each other.”

The Chancellor said it would be interesting to discuss how far bond issuance could be co-ordinated, “not just in the Eurozone but with regards to all the bonds being issued round the globe”.

Angela Merkel meeting staff at an Aids project in Berlin, on Thursday, Feb 26, 2009.

Germany has ruled out the issue of a Eurozone joint bond, as  it would increase the interest rates Germany.

Earlier this week, Ireland raised a total of €4bn, through the issue of a three-year bond at nearly 2.5 percentage points over equivalent Bunds. Before the credit crisis, Irish bonds traded at about the same level as German securities.

European Central Bank President Jean-Claude Trichet, said in Dublin on Thursday, that speculation Ireland may default on its national debt burden, was "absurd".

The comments came on a day when Finance Minister Brian Lenihan signalled taxpayers could fund a multi-billion euro "toxic land bank" to ease pressure on debt-laden financial institutions.

Trichet, who was in Dublin to address the Institute of International and European Affairs, said while Ireland faced "very challenging times" the Government was "acting resolutely to address the situation".

He was "optimistic" about Ireland and predicted the country will emerge strongly from the recession, but warned pay cuts may be needed to restore competitiveness.