Peter Bofinger, a member of German Chancellor Angela Merkel’s council of economic advisers, said euro-area governments should consider issuing joint bonds to refinance the existing debt of member countries, the newspaper Sueddeutsche Zeitung reported.
Such bonds should sufficiently stabilize markets, Bofinger wrote in an opinion piece. Euro bonds should not be issued to finance new borrowing because it may create room for misuse, he said. While joint bonds may push German refinancing costs “slightly higher,” the euro area shouldn’t have a worse credit rating than the U.S., which is considered a “superb debtor” despite an “enormous” budget deficit, Bofinger said.
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