As momentum builds towards finding a “roadmap” for commonly-backed eurozone bonds ahead of next month’s EU summit, where the topic is likely to be on the table, officials have begun focusing on interim steps before getting to full-blow mutualisation of debt, which Berlin has made clear it will not support.
Much of the attention thus far has gone to a “wise men” report put out by five German economists last year that would create a “debt redemption fund,” which would refinance debts from eurozone countries over 60 per cent of their gross domestic product. The fund would jointly guarantee the excess debt to help pay it off through cheaper borrowing costs.
But in recent weeks, people briefed on internal debates in Frankfurt and Brussels say another incremental idea has caught the interest of EU officialdom: instead of eurozone bonds, the currency bloc should start with eurozone bills, short-term debt backed by all 17 euro members. Read more