A Plan for Euro Bonds Revisited

France’s new president François Hollande is expected to push for jointly-issued eurozone bonds this week, a move German Chancellor Angela Merkel is likely to oppose. The political resistance to backing the bonds of other member nation is understandable. But so is the resistance to foreigners dictating a nation’s fiscal policies. A well-designed system for euro bonds would provide strong incentives for responsible fiscal actions over the long run and greatly reduce the likelihood of that special assistance if needed in the future. The proposal I offered in 2010, “A New Plan for Euro Bonds,” does this.