Eurobonds (or coronabonds) would not be costly for Northern euro area countries

If the eurobonds are well designed, they can lower financing costs for many euro area countries, while hardly or not increasing the costs for the others, writes Matthias Weber

 
There are currently heated debates on eurobonds, partly with the name coronabonds. This topic is also on the agenda again for the next EU and euro area meetings. Some countries, which have to pay relatively high interest rates on their government debt, demand the issuance of such bonds, most notably Italy, understandably assuming that such bonds would reduce their financing costs (which would help to fight the outbreak of Covid-19 and to restart the economy thereafter).

Countries with low financing costs, such as Austria, Finland, Germany and especially the Netherlands, thus far oppose eurobonds. However, the fears in those countries (of having to take over the debt of other countries in the case of a default and of increased own borrowing costs when issuing bonds jointly with “weaker” countries) are often informed by false argumentation. In fact, if the eurobonds are designed well, their issuance will hardly cost Northern countries anything.

Συνέχεια ανάγνωσης εδώ