The European Commission said it will present a report on the feasibility of eurobonds to the European Parliament, despite opposition from Germany and France.
This suggests that European policymakers are running out of options in addressing the rapidly escalating financial crisis in the eurozone, but also a compelling sign that they could be closing in on a long-term solution.
EU Economic and Monetary Affairs Commissioner Olli Rehn wrote in a note to Parliament, “These euro securities would aim to strengthen fiscal discipline and increase stability in the euro area through the markets.”
Bloomberg reports this note was dated August 12 — before the meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy.
Although Merkel and Sarkozy said Tuesday that euro bonds were not a viable solution in the short-term, experts are increasingly convinced that they may provide the only way out of financial turmoil.
According to former EC president Jacques Delors and researchers at the Bruegel Institute, a common eurozone bond would cover debt of up to 60% of member states’ GDP. In such a plan, Bloomberg estimated that Germany could pay as much as €47 billion ($67.6 billion) more to fund its public debt each year.