December 23rd, 2011
No sooner had The parties to the recent crisis summit on 21 Their decisions made in July 2011 there extensively acknowledged and celebrated as the end of the debt crisis, there was new unrest in financial markets. The focus was on Spain and Italy, whose debt securities by the European Central Bank have been purchased to support the markets and prevent a rise in interest rates.
Before the meeting, Chancellor Merkel and President Sarkozy on 16 8th 2011 was therefore an important role. With their help, namely those funds should be applied, which are then provided by the illiquidity or insolvency of the threatened states in the form of loans available. So far, however, provided that their scope is limited to the volume of the rescue fund and on countries that are subject to an EMU-rescue operation. In the discussion here it is Euro-bonds on the other hand is a fundamental principle in financing and thus unlimited form of European government debt.
Respect to the design and conditions of such bonds € Various proposals in the area: a first proposal goes back to Jakob von Weizsäcker, Jacques Delpla, which was first presented in May 2010. They propose to distinguish between “Blue Bonds” and “red bonds” to distinguish. Blue bonds are the actual Euro-Bonds, which are emitted from the states of the Euro-zone and together for they shall be jointly and severally. Blue bonds but this will only be available to those countries whose debt ratio does not exceed the limit of 60 percent. In addition, Red Bonds are issued by those countries whose debt ratio to exceed 60-percent limit. These are but a purely national issue for which there is no European liability.
This proposal is relatively straightforward
- is, however, completely ignores the current problems. Countries with debt ratio below 60 percent are generally not dependent on Euro-bonds. You will have a good rating, and also in national emissions – if ever – pay only a low risk premium. Those who would like to take account of their debt situation in the Euro-bonds could claim this not just with this proposal. Rather, they have to – as usual – spend national government debt to pay for the interest rates are correspondingly high. This sees the proposal as described above even explicitly to – hold the corresponding states of excessive debt
- and rightly so.can
In the present situation but only go to those Euro-bonds that are being made available to the problem countries. This result in particular the following questions:
To what extent should and can € bonds are issued?Under what conditions they are to be placed on the market?What effects has this policy – possibly taking into account of conditions – the countries of the Euro-zone?
The scope is first determined by the necessary financing needs of the affected countries. By 2020 only requires the funding of Greece, Ireland and Portugal, an amount of about € 830 billion. Finance, one would also Spain and Italy from 2012 rescue of pots of EMU, then the total financing requirements for 2020 increased to around € 3,000 billion. Altogether, this is still a conservative estimate of the total. Thus already the planned restructuring of Greece has been considered. In addition, for all countries, the interest payments in 2011 continuing into the future, although more likely to expect rising interest payments, because the debt will rise even further in the countries concerned. Furthermore, the principal payments relating to all countries, the only private debt. For Spain and Italy were also included no funding for 2011 amounts, because both countries have been able to finance the private capital market.