World Bank President Robert Zoellick is calling for the issuiing of a supranational euro bond that would be backed by credit guarantees from stronger euro zone economies while providing cheaper funding to struggling ones.

Calling his suggestion a partial euro bond solution based on the Hamiltonian model used by the first 13 U.S. states during the late 18th century, Zoellick told the Wall Street Journal on Wednesday that the revenue from such bonds could be used to facilitate a match between the length of reforms and the length of funding.

The idea is, you offer some support for reforming countries on the financing side, but you keep the pressure on so that the markets will continue to apply discipline, in this case to any debt over the 60 percent, Zoellick said Or you could use the ESM [European Stability Mechanism, Europe's continent-wide rescue fund] and have the ESM provide the support, and the ESM will fund itself with what are in effect euro bonds. The exact tool is less important than the concept.

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