Joined-Up Thinking: Free Exchange  

Oleh:

[s.n]

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 403 no. 8780 (Apr. 2012), page 79.
Topik: Euro; Sovereign Debt; Public Finance; Bonds; International

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.71 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Anyone laboring under the illusion that the euro crisis could be solved by liquidity provision from the European Central Bank (ECB), however munificent, has been disabused. By encouraging banks to stock up on domestic government debt, the ECB's loans have reinforced the pernicious links between weak banks and weak governments. That connection is currently hurting Spain. Meanwhile, a German-inspired "fiscal compact" to insert public-debt brakes into national laws does nothing to help countries such as Italy climb out of the debt pit. "Euro-bonds", shorthand for euro-area sovereign debts that are jointly guaranteed by the 17 member countries, could provide a solution. But replacing all national government bonds with collectively underwritten debt is a non-starter. A fully mutualised euro-zone debt market would be enormous--at EUR 8 trillion ($10.5 trillion), not far short of America's--and thus very liquid. Any feasible plan for Euro-bonds will therefore have to be on a partial basis. That means limiting the scope of joint guarantees to specific portions of member states' sovereign debt, or setting a defined lifespan to the guarantees.

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