The appointee, Jorg Asmussen, picked by German Chancellor Angela Merkel in January to represent Germany on the European Central Bank's executive board, has put his support behind the strategy of the central bank buying government bonds to lower borrowing costs for struggling eurozone members, The Daily Telegraph reported Tuesday.
"Asmussen was hand-picked for the role by Merkel. It means that [ECB President Mario] Draghi has managed to crack what seemed like a solid German Wall," said Raoul Ruparel of the think tank Open Europe.
The policy of buying bonds has been opposed by Bundesbank, Germany's central bank. Germany has also stuck guardedly to its stance that fiscal discipline was required for any country receiving aid from the international European Stability Mechanism.
Asmussen said in an interview that the high borrowing cost for Spain and Italy "reflects fears about the reversibility of the euro, and thus a currency exchange risk."
This would shift the focus and some of the blame for the debt crisis away from irresponsible governments and allow the ECB to buy bonds, which would not add to sovereign debts, as would aid given directly to a government.
It also means the governments would have less urgency in making spending cuts. Spain, which has resisted calls for further austerity measures, has already cut spending by $127 billion.
Asmussen said the bond buying should be "unlimited."
The euro gained against the dollar Tuesday and yields on 10-year, benchmark bonds in Italy lost 0.1 percentage points, falling from 5.79 percent to 5.69 percent. In Spain, 10-year bond yields fell from 6.33 percent to 6.231 percent. In Portugal, they fell from 9.692 percent to 9.467 percent, The Guardian reported.
Greek Prime Minister Antonis Samaras, meanwhile, is attempting to rally support for an two-year extension for some of the terms of Greece's international bailout. He is expected to meet with Eurogroup leader Jean-Claude Juncker Wednesday, German Chancellor Angela Merkel on Friday and French President Francois Hollande on Saturday, ekathimerini.com reported.
The Sun reported Tuesday that German Finance Minister Wolfgang Schauble had already snarled at extensions. "We cannot throw money into a bottomless pit," he said during the weekend.
Italian news agency ANSA reported that credit rating agency Fitch weighed in on Tuesday regarding Italy's debt crisis.
"Italy doesn't need more austerity measures. Those that have been launched are enough," Fitch said.
"Now reforms are necessary," said David Riley, Fitch's sovereign ratings chief.