It was kind of a weird Sunday night because there was no European country on the brink of collapse that needed to be bailed out.Of course, everyone knows that the crisis isn’t over, and none of Europe’s leaders feel comfortable yet.
The stopgap bond buying measures, and rapidly diminishing stability fund haven’t done much.
At FT, Euro Group chairman Jean-Claude Juncker and Italian Finance Minister Giulio Tremonti call for the establishment of E-Bonds or European-wide bonds that would essentially be the beginning of shared finances or to put another way, the first step towards ending sovereignty.
And they could come fast:
The European Council could move as early as this month to create such an agency, with a mandate gradually to reach an amount of outstanding paper equivalent to 40 per cent of the gross domestic product of the European Union and of each member state.
That would bring sufficient size for it to become the most important bond market in Europe, progressively reaching a liquidity comparable to that of US Treasuries. But to ensure this happens, two further steps must be taken. First, the EDA should finance up to 50 per cent of issuances by EU members, to create a deep and liquid market. In exceptional circumstances, for member states whose access to debt markets is impaired, up to 100 per cent could be financed in this way. Second,the EDA should offer a switch between E-bonds and existing national bonds.
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