20 December 2011

ECON Committee: Eurobonds for eurozone stability

Eurobonds can become a source of stability for the eurozone in the medium term, but cannot meet its short term needs, said the Economic and Monetary Affairs Committee. At the same time, the committee also approved a question to be put to the Commission at Parliament's next plenary session on the progress of play of its green paper on eurobonds and asking for an analysis of the reactions received so far.

Questions still open on green paper

The resolution welcomes the Commission's consultative document on the introduction of "stability bonds" but also notes that further work is required on some issues. These would include specific ways of addressing potential moral hazard, making the system attractive for AAA countries as well as heavily indebted ones, increasing competitiveness, and introducing enforceable debt reduction systems, among others.

Eurobonds for eurozone longevity

The resolution does not claim that eurobonds are a quick fix for the current difficulties. It does however argue that they should be considered an important component of medium-term solutions. The resolution also acknowledges that a "necessary precondition" for the common issuance of bonds is stronger fiscal coordination aimed both at better economic governance and growth.

To tackle immediate difficulties, the resolution calls on the Commission rapidly to table proposals "to decisively address the current crisis, such as the European redemption pact proposed by the German Council of Economic Experts (...), the finalisation and ratification of a European Stability Mechanism treaty (...), eurobills as well as joint management of sovereign debt issuance".

Next steps

This resolution and question to the Commission are expected to feature on the next plenary session agenda. With a view to this, the Economic and Monetary Affairs Committee is also preparing an own-initiative resolution, under the stewardship of Sylvie Goulard (ALDE, FR),   providing a more detailed reaction to the Commission's green paper.

Press release

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