Brussels, 31/05/2012 (Agence Europe) - MEP Sylvie Goulard (ALDE, France) suggests a three-stage approach to partial pooling of eurozone sovereign debt in an initiative she has lodged at the EP. In a report, she sets out the major challenges and options, as she explained to a small circle of reporters on Thursday 31 May. Her aim is to weigh in to the debate about eurobonds that the arrival of the new French president, François Hollande, has raised at the European Council as the eurozone examines how to boost the economic arm of economic and monetary union. Adoption of the Goulard report by the EP's economic and monetary affairs committee is expected in September.
Goulard says the first stage would be one of the following: either setting up a redemption fund to partially pool eurozone nations' excess debt for 25 to 30 years, as mooted by German economists (see EUROPE 10528) or introducing eurobills - very short-term bonds issued and guaranteed in common, to alleviate the problems of struggling countries, as suggested by a certain Professor Philppon and a certain Professor Hellwig. The second stage would be the introduction of joint sovereign bonds (“blue bonds” for non-excess debt, not exceeding 60% of GDP), with the excess debt (“red bonds”) remaining in the hands of national treasuries, based on an idea by economists Delpla and von Weizäcker. Neither stage would require any change in the treaty, unlike the third stage, which would pool all risks and share all bonds.
It is in the interests of countries in Northern Europe, and so of Germany, not to abandon countries which, like Spain and Italy, are making efforts to the high “social cost”, giving them an incentive, said Goulard. She said that pooling risk like this would be subject to tight conditions as set out in the Stability and Growth Pact and the fiscal compact. She said that setting up an international debt community to compete on the market with US debt would win over investors from Milwaukee to Shanghai by showing them that the eurozone is serious about sustainable consolidation of monetary union. (MB/transl.fl)