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  • Euro Bonds: The Pros and Cons

    A European Commission discussion paper on euro bonds to be released on Wednesday puts forward, as our story this morning shows, three possible approaches for issuing common government bonds in the euro zone.

    Two would carry “joint and several” guarantees, making euro zone states responsible for repaying the debts of others. Option 1 envisions all national government bond issues in the euro zone being converted to common euro bonds, while option 2 envisages a partial replacement of national bonds with euro bonds. Option 3 would be for the partial replacement of national government bonds with euro bonds carrying “several” but not joint guarantees, making each state responsible for its own share of euro bonds. The third approach would be easier to implement, in part because it wouldn’t require changes to European Union Treaties, but would carry fewer benefits.

    Here’s a table, amended slightly from the report, that addresses the pros and cons of each option, as the Commission sees them.

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