Does Europe need a Eurobond?

With Jacques Delpla (Conseil d’Analyse Économique), Jakob von Weizsäcker (Bruegel and Thüringer Ministerium für Wirtschaft, Arbeit und Technologie) and Karsten Wendorff (Deutsche Bundesbank). Chaired by: Zsolt Darvas (Bruegel).

The euro-area sovereign debt crisis and its repercussions have prompted a series of initiatives to reform the EU’s policy system, including the establishment of the European Stability Mechanism (ESM). But the Eurobond is not yet part of the arsenal and is rejected by a large number of countries. There are fears about the implications of a joint liability of participating countries in the absence of fiscal integration and about a possible borrowing cost increase for countries with sound fiscal positions. Would the ESM, along with collective action clauses added to national bond issuances, be a proper institution to ensure fiscal discipline and resolve euro-area sovereign debt crises? Or would there be a role for Eurobonds? And if so, could they play a role in the resolution of the current euro-area debt crisis or can be envisioned only at the end of a process of deeper fiscal integration? The event was chaired by Zsolt Darvas. The brief initial remarks of Jacques Delpla, Jakob von Weizsäcker and Karsten Wendorff were followed by an open discussion.

Background material:

Jacques Delpla and Jakob von Weizsäcker, ‘The Blue Bond Proposal’, Bruegel Policy Brief 2010/03, May 2010

Jacques Delpla and Jakob von Weizsäcker, ‘Eurobonds: The blue bond concept and its implications’, Bruegel Policy Contribution 2011/02, March 2011

Axel Weber, Jens Ulbrich and Karsten Wendorff, ‘Safeguarding financial market stability, strengthening investor responsibility, protecting taxpayers. A proposal to reinforce the European Stability Mechanism through supplementary bond issuance terms’, Deutsche Bundesbank, March 2011.

Presentations:

Jacques Delpla and Jakob von Weizsäcker – "The Blue Bond Proposal"

Karsten Wendorff - "Does Europe need a Eurobond?"

Summary here