MEPs back Eurobonds but 'challenges' remain
by Daniel Mason
Eurobonds pooling eurozone debt could be an important medium-term solution to the debt crisis, members of the European Parliament said today during its Strasbourg plenary. But the European Commission has indicated that "daunting challenges" remain before it takes a decision on whether they should be introduced.
Today, MEPs adopted by 515 votes to 52 a resolution that welcomed the commission's green paper on Eurobonds but said certain details had to be clarified – including how to make a system of common debt issuance more attractive to AAA rated countries that already enjoy low interest rates on sovereign bonds.
Some European Union member states, notably Germany, have so far opposed pooling debts because of the potential to remove incentives for weaker countries – which are currently forced to pay higher interest rates – to implement structural reforms and improve the competitiveness of their economies. In the resolution, MEPs noted that Eurobonds would require stronger fiscal coordination, economic governance and growth within the eurozone, and that they were not a short-term fix for the current crisis.
Last November the commission outlined three options for Eurobonds, also known as stability bonds, and ran a public consultation on the issue until January 6. But yesterday in parliament, commission vice-president Neelie Kroes – standing in for economics chief Olli Rehn – said the consultation had received only 18 responses. She added that the commission would not rush to a conclusion. "The possible challenges remain daunting," said Kroes. "There are many wide technical topics to be analysed before any definitive decisions are taken. And we must take the time to do so, as nothing should be left to chance."
However, British liberal MEP Sharon Bowles, who chairs the parliament's economic and monetary affairs committee, said the introduction of Eurobonds would show that the EU had a medium-term response to the crisis "beyond austerity". She said: "Despite the contrasting views in support of common stability bonds, we believe they are part of the picture in our attempt to stabilise the eurozone crisis. We must acknowledge that what we do marks the level of ambition and commitment to the next stage of evolution of monetary union."
She also advocated short-term Eurobills. "I dub these a 'beginner's bond' – which would be time and quantity limited, with good behaviour needed to allow roll over. Eurobills also have the advantage of lower interest rates." Bowles' economic and monetary affairs committee is preparing its own resolution giving a more detailed response to the commission's green paper.
The Green group's economics spokesman Philippe Lamberts MEP said the "sole focus on budgetary consolidation in response to the euro crisis has failed" and Eurobonds could play a central role in a "more comprehensive approach". Like Bowles, he also backed Eurobills, and called on the commission to include them in proposals to "decisively address the current sovereign debt crisis".