Europe’s Dream Of Safe Assets to Rival Treasuries Gets Boost
- Germany, France back issuing joint bonds to fund the recovery
- Plan would see the EU tap the markets for 500 billion euros
Emmanuel Macron speaks during a joint video news conference with Angela Merkel, in Paris, on May 18.
Photographer: Francois Mori/AFP via Getty Images
For Europe’s integrationists, a jointly issued bond with the safety and liquidity to rival U.S. Treasuries is necessary to ensure the bloc’s stability. Germany and France may have taken a small, first step toward creating such a European safe asset.
In a landmark intervention, German Chancellor Angela Merkel and French President Emmanuel Macron agreed to support a 500 billion-euro ($546 billion) aid package financed through the issuance of bonds by the European Union’s executive arm. While the proposal for the creation of a recovery fund still needs to be approved by the other member states, it indicates the acceptance -- albeit in a limited fashion -- of a more wide-ranging supranational asset.