Eurobonds Aren’t What Europe Needs Right Now
It's a nice dream, but a completely unrealistic one in the face of a pressing crisis.
With countries in lock down, European leaders must focus on what’s fast, effective and practical.
Photographer: Pascal Le Segretain/Getty Images
Jean Monnet, one of the fathers of the European Union, said that “Europe will be forged in crises.” So it was in a sense reassuring to learn that in the face of the ever-spreading coronavirus pandemic, EU leaders were discussing one of the most ambitious ways to knit their countries ever closer together — issuing bonds at the bloc’s federal level.
Eurobonds — debt issued under joint and several liability — are the Holy Grail of euro-zone integration. What’s a shame is that, realistically, they would not be particularly helpful at this moment of panic. It will take time to design them, and any issuance would probably be limited. The euro area’s leaders should instead focus on a response that is significant in size and can be executed quickly. Clearly that points to a large-scale coordinated fiscal stimulus that’s accompanied by credible support from the European Central Bank. The ECB’s announcement on Wednesday night that it would launch an extra emergency bond-buying program worth 750 billion euros ($820 billion) is a promising sign.