Paths to Eurobonds

By Ashoka Mody, Stijn Claessens, Shahin Vallée

July 1, 2012

Preview Citation

Format: Chicago

Ashoka Mody, Stijn Claessens, and Shahin Vallée. Paths to Eurobonds, (USA: International Monetary Fund, 2012) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses proposals for common euro area sovereign securities. Such instruments can potentially serve two functions: in the short-term, stabilize financial markets and banks and, in the medium-term, help improve the euro area economic governance framework through enhanced fiscal discipline and risk-sharing. Many questions remain on whether financial instruments can ever accomplish such goals without bold institutional and political decisions, and, whether, in the absence of such decisions, they can create new distortions. The proposals discussed are also not necessarily competing substitutes; rather, they can be complements to be sequenced along alternative paths that possibly culminate in a fully-fledged Eurobond. The specific path chosen by policymakers should allow for learning and secure the necessary evolution of institutional infrastructures and political safeguards.

Subject: Asset and liability management, Bonds, Financial institutions, Fiscal policy, Fiscal union, Government asset and liability management, Liquidity, Public debt, Public financial management (PFM)

Keywords: Bond restructuring, Bonds, Bonds yes, Debt issuance, Debt sustainability, Eurobonds, Europe, European Monetary Union, Eurozone, Fiscal risk-sharing, Fiscal union, Global, Government asset and liability management, Liquidity, Monetary union, Overhang problem, Restructuring mechanism, Seniority structure, Sustainability dynamics, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/172
Stock No:

WPIEA2012172
ISBN:

9781475505207
ISSN:

1018-5941

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