German 'bail-in' plan for government bonds risks blowing up the euro: Councilmember

"It is the fastest way to break up the eurozone," said Professor Peter Bofinger, one of the five "Wise Men" on the German Council of Economic Advisers.

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Moreover, the new plan empowers private investors to act as judge and jury on the solvency of states. "We can't allow a regime where markets are masters of governments," he said.

The German Council is defiant. It swats aside any talk of an EU treasury or shared fiscal authority. The only way to uphold monetary union is to impose strict control - it said - and "reinforce existing rules".