BERLIN, Dec 30 (Reuters) - German Finance Minister Wolfgang Schaeuble reiterated on Thursday the euro zone should not issue joint sovereign bonds to tackle future crises, adding that the euro would prove to be a stable international currency.
"The higher yield level expressed in so-called spreads is both incentive and sanction (to have a stable fiscal policy)," Schaeuble wrote in a contribution to the German Tagesspiegel newspaper to be published on Thursday.
He added that Greece's and Ireland's failure to repay their debt were signs the system worked.
"That's why this mechanism should not be put out of work through a collectivisation of the yield level, including in the form of euro bonds," Schaeuble added.
Germany has been determined to kill off the idea of issuing common European bonds, a proposal championed by Jean-Claude Juncker, the chairman of euro zone finance ministers, among others, with the aim of stepping up fiscal integration.
While peripheral euro zone countries are struggling with the burden of a sovereign debt crisis, Germany -- Europe's largest economy -- is steaming ahead and widening the gap with its peers.
Germany fears euro bonds would raise its borrowing costs -- the lowest in the European Union -- and make it subsidise profligate states. It also worries E-bonds would reduce market discipline on countries to reduce their budget deficits.
Schaeuble wrote that the European Council's decisions in October and December had set the stage for turning this year's short-term crisis management into a permanent system of stabilisation next year.
Such a system should also involve private creditors, he added. "It is also clear that a permanent crisis management mechanism doesn't just assume the solidarity of all euro member states but also must include a contribution from creditors in case of restructuring."
That would prove the euro as a stable international currency, he said.
"Most of all it will convince the international financial world that the euro remains a long-term stable currency that the entire world depends on, not least because the real problems in other parts of the world are by no means smaller than those in Europe." (Reporting by Annika Breidthardt; Editing by Dan Grebler)