The coronavirus crisis forced the EU to turn to a tool it rarely used, namely other people’s money. Having pledged nearly a trillion euros in new government loans, he is now playing a major player in international capital markets. However, political differences risk making this tool a time-limited exercise.

This would be wrong. A rolling bond sale program could help the EU. to finance much-needed infrastructure, build reserves for future crises and support the euro. In 2010, EE members stopped issuing ordinary bonds due to the Greek crisis. This refusal undermined the market’s attitude towards monetary union, exacerbating the sovereign debt crisis that soon spread throughout the eurozone.

A decade later, Germany’s decision to turn from austerity to anti-austerity has stymied the EU. along a different trajectory. To deal with the pandemic, European governments have come together to approve new joint loans worth about 800 billion euros.

European countries are firmly entrenched in the global bond markets. However, the EU as a whole has never had the leverage of joint borrowing that the United States enjoys, so its collective efforts have been limited. From 2009 to 2019 EU. sold only €78 billion worth of bonds in global capital markets.

In January 2023 outstanding issues stood at €344 billion, of which over €275 billion have been sold since 2020. This is still a small fraction of the amounts issued each year by the US and Japan, but quite significant to support the secondary liquidity market.

The general connection of EE is that it has solid foundations. The Union currently sells securities with maturities ranging from short-term bonds to another 30 years with benchmark interest rates that are used as benchmarks for other euro-denominated securities. Brussels has also established a large network of banks as key agents to ensure the smooth running of sales and subsequent transactions.

Investors were enthusiastic about this scheme without demanding exorbitant profits. In general, EU bonds tend to trade at about the same level as France, although the first sales of short-term bonds in September 2021 saw yields fall to the levels of Germany, Europe’s most stable debt issuer.