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The complete substitution of national bonds for so-called “eurobonds” is one of three options outlined in the study. The Commission report acknowledges that the move would require extensive changes in European Union treaties that could delay its implementation for years.
In addition, such extensive pooling of sovereign debt has been fiercely resisted in Germany, where officials believe it would relieve market pressure on profligate eurozone countries, allowing weak economies to become “free riders” on Germany’s strong credit rating.
One idea is for EU approval of all 17 eurozone budgets and, in the case of a country in trouble, the possibility of putting it “under some form of ‘administration'" by EU authorities. “Without this framework it is unlikely that this ambitious approach to stability bond issuance would result in an outcome that would be acceptable to Member States and investors”, the report says.
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