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Munchau Says Eurobonds Would End Sovereign Debt Crisis

We have seen how German policy experts like Otmar Issing have argued against Euro Bonds. Now, we get a cogent argument in favour of thee debt instruments via Wolfgang Munchau of Eurointelligence. Munchau recently penned an FT column making the case for more fiscal federalism in Euroland. The interview with Bloomberg’s Andrea Catherwood below supports that piece. Munchau has also argued that the Euro Zone is inching toward break-up. He clearly sees the sovereign debt crisis in Europe as existential and believes Eurobonds would go a long way in repairing the fractures.

Note that the proposal for E-bonds introduced by Juncker and Tremonti that Munchau talks about is identical to the mechanism I laid out last week. I talked about this as a way of insuring liquidity to the periphery. Munchau argues specifically that this would be a funding mechanism after the European bailout fund (EFSF) runs out in 2013.

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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

5 Comments

  1. Daniel says:

    “Munchau has also argued that the Euro Zone is inching toward break-up.”

    here in germany, we say: Lieber ein Ende mit Schrecken als ein Schrecken ohne Ende.

    Any call for a fiscal union is simply an euphemism for an even bigger permanent subsidy from the core countries to the periphery (we already have quite large EU funds, see here: http://www.faz.net/s/Rub0E9EEF84AC1E4A389A8DC6C23161FE44/Doc~E74AEDA96748148298CA13BEB9EE24EA7~ATpl~Ecommon~SMed.html )

  2. John Haskell says:

    This is a liquidity crisis, not a solvency crisis. If the Irish government would just extend a blanket guarantee to its banks liabilities, confidence will be resolved and private investors will get over their panic and invest again.

    Oops, I misspoke.

    This is a liquidity crisis, not a solvency crisis. If the German government would just extend a blanket guarantee to Irish bank liabilities, confidence will be resolved and private investors will get over their panic and invest again.