Eurobonds (or Coronabonds) Would Not Be Costly for Northern Euro Area Countries
LSE Business Review, 2020
6 Pages Posted: 12 May 2020
Date Written: April 16, 2020
Well-designed eurobonds would lower financing costs for many euro area countries while hardly or not increasing the costs for the others. These bonds should have an explicit guarantee from the ECB. These bonds could be used up to a limit of GDP (a low number of 10-25% of GDP would allow to observe market reactions before deciding whether to expand). Such bonds would increase the costs on regular German 10-year bonds by at most 10 to 30 basis points.
Keywords: Eurobonds, coronabonds, covidbonds
JEL Classification: F45, F34, G15, H63, E43
Suggested Citation: Suggested Citation