Eurozone leaders face a fundamental choice when they meet on Thursday. Either they declare, once again, that they stand ready to do “whatever is necessary” to overcome the eurozone crisis, or they actually do it. In the first case, markets are likely to step up to the next stage of their challenge to the European authorities. They will target larger countries, such as Italy and Spain, thus making the “whatever necessary” ever more costly and ever less credible. Alternatively, the eurozone leaders could show real leadership.
There is growing consensus that it will be difficult find a lasting solution to the eurozone crisis without the use of eurobonds, which would assert the euro currency in the global markets. The scheme, gathering increasing support in the European Parliament, would be aimed at strengthening fiscal discipline and increasing stability in the euro area through market mechanisms, ensuring that those member states that enjoy the highest credit standards would not suffer from higher interest rates.
A European vision, based on the creation of a European instrument, backed by a precise timetable, could be the best way to restore trust and stability in the eurozone.