Eurobonds (or Coronabonds) Would Not Be Costly for Northern Euro Area Countries

LSE Business Review, 2020

6 Pages Posted: 12 May 2020

See all articles by Matthias Weber

Matthias Weber

University of St. Gallen - School of Finance

Date Written: April 16, 2020

Abstract

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

Weber, Matthias, Eurobonds (or Coronabonds) Would Not Be Costly for Northern Euro Area Countries (April 16, 2020). LSE Business Review, 2020, Available at SSRN: https://ssrn.com/abstract=3578504

Matthias Weber (Contact Author)

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

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