Common Misconceptions on Eurobonds

August 23, 2011
Hans-Werner Sinn, sitzend

Sinn Targets Eurobonds. Image via Wikipedia

There are many common misconceptions on Eurobonds out there. I was going to compile a list, but the German economic newspaper Handelsblatt did me the favor of having them all in one article – however not identified as such.

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How to make Eurobonds work

August 16, 2011
The Lisbon Treaty formalised Jean-Claude Junck...

Junker, "My Name is Bond, Eurobond". Image via Wikipedia

The political pressure on Germany and other surplus countries within the Eurozone to introduce Eurobonds is constantly increasing. I’m not a big fan of Eurobonds without further political integration, but given the problems of the deficit countries, I fear we may not have the time to introduce a common democratic European government to orderly introduce Eurobonds. As I write this, Angela Merkel and Sarkozy just pleaded for a common European Economic Government. As Merkel’s CDU always cited this too as a prerequisite to the introduction of Eurobonds, I guess that the chances that we actually will get Eurobonds are increased, despite Merkel saying otherwise.

So the question addressed in this post is: Can Eurobonds work without further political integration and thus without creating a “transfer union”. Yes, that is possible.

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