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Paths to Eurobonds

Author/Editor: Ashoka Mody | Stijn Claessens | Shahin Vallée
Authorized for Distribution: July 1, 2012
Electronic Access: Free Full Text (PDF file size is 705KB)
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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.
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Series: Working Paper No. 12/172
Subject(s): Financial stability | Monetary transmission mechanism | Sovereign debt
Author's keyword(s): Eurobonds; eurozone; fiscal risk-sharing; European Monetary Union
    Published:   July 1, 2012        
    ISBN/ISSN:   9781475505207/1018-5941   Format:   Paper
    Stock No:   WPIEA2012172   Pages:   39
    Price:   US$18.00
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