Commission President José Manuel Barroso announced yesterday (16 November) in the European Parliament that his office would table next Wednesday a proposal on ‘stability bonds’, which are otherwise known as eurobonds.
In what can be seen as a challenge to Germany which opposes introducing eurobonds to tackle the eurozone sovereign debt crisis, Barroso said he believes that euro stability bonds will be seen as ‘natural’ when the Union reaches its goal of reinforced governance, discipline and convergence in the euro area.
Barroso made the statement as part of a 'Debate on economic governance' with MEPs in Stasbourg, in the presence of European Council President Herman Van Rompuy and Eurogroup President Jean-Claude Juncker.
“The continued turbulent events in the sovereign bond markets were a sign that our challenges are of a greater magnitude,” Barroso said. He added that the problems the eurozone would face in 2012 would be "even more systemic and urgent".
"We should continue to deal with them robustly and not be diverted from the direction we have set ourselves," he pleaded.
Barroso said the Commission would present and assess the options for the joint issuance of bonds in the euro area, as "a concrete demonstration of the principles of responsibility and solidarity".
However, Germany is strongly opposed to issuing eurobonds, saying it could substantially raise the country's liabilities in the debt crisis. However, a growing field of investors and economists say it would be the best – and perhaps only – way of solving the debt crisis.
Yesterday, German Deputy Finance Minister Joerg Asmussen said that it would be wrong to introduce eurozone bonds as a "singular, isolated instrument" as a quick fix for the currency union's widening debt crisis.
Asked by EURACTIV to explain if there was a difference between 'stability bonds', an expression launched by Barroso in his 'State of the Union' speech in September, and the more popular expression of eurobonds, Commission spokesperson Olivier Bailly said journalists were free to call them as they like.
He explained, however, that by using the term stability bonds, the Commission wanted to convey the message that the bonds were not only a means to mutualise debt, but to foster stability.
Guy Verhofstadt, leader of the liberal ALDE group and certainly the most prominent promoter of eurobonds, introduced a new term, speaking of 'eurosecurities'. He added to this what can be seen as a middle way, to be put in place according to a blueprint from German economists.
"We need to look into the proposal made by the five wise economists from the German Council of Economic Experts. In their opinion, a key element to end the crisis is the establishment of what could be called a European collective redemption fund. This would mutualise the debt in the eurozone above 60%, combined with a bold debt reduction scheme for those countries, which are not on life support from the [European bailout fund] EFSF," Verhofstadt said.
Only a real economic government combined with a form of eurobonds can stop the eurozone crisis, he argued.
Verhofstadt also said that much could be done inside the existing EU treaties, but changes were necessary and a convention to launch a new EU treaty change was needed.
The issue of a need of a treaty change is widely expected to be discussed at the 9 December EU summit.