Careful pooling of sovereign debt is good for the Euro, say MEPs

16-1-2013 — / — A resolution to keep up pressure on the Commission and member states to explore all avenues for pooling sovereign debt was adopted on Wednesday. The text affirms that fears of free-riding can be overcome by carefully-crafted solutions, so debt pooling need not be automatically taboo. It also points out that the Eurozone is unique in having a single currency, but no common bond market.

The resolution, authored by French Liberal Sylvie Goulard, calls on the Commission to report on the various options for pooling debt, possibly accompanying this report with a roadmap for introducing them. The resolution was adopted with 361 votes in favour, 268 against and 33 abstentions.

MEPs advocate setting up a European Redemption Fund

The resolution sets out various options. Some could be implemented immediately or in the medium term such as a European Redemption Fund, whereas common issuance of national debt or the creation of European debt would require a Treaty change.

Monetary union entails going further

The resolution notes that the Euro zone is in the unique situation of having a shared currency but no common bond market or common budgetary policy.  The Euro bloc’s stability therefore depends on its completion, which is bound to have a positive effect on financial markets.

Procedure:  Non-legislative resolution



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