Brussels [ENA] Eurobonds will be a source of stability for the Eurozone in the medium term, but only when its remaining design issues are resolved, said Parliament in a resolution voted on Wednesday. At the same time, other financial instruments must be put in place rapidly to meet the bloc's short-term needs, such as the redemption pact proposed by the German Council of Economic Advisers, it added.
On Tuesday the Commission was questioned in plenary on the responses received so far to the green paper on introducing "stability bonds". Questions still open on green paper. The resolution welcomes the Commission's green paper but also notes that further work is required on some issues. These would include specific ways of addressing potential moral hazard, making the system attractive for AAA countries as well as heavily indebted ones, increasing competitiveness, and introducing enforceable debt reduction systems.
Eurobonds for Eurozone longevity. The resolution does not claim that Eurobonds are a quick fix for the current difficulties. It does however argue that they are an important component of medium-term solutions. The resolution also acknowledges that for the common issuance of bonds, stronger fiscal coordination, aimed both at better economic governance and growth, is needed. To tackle immediate difficulties, the resolution calls on the Commission rapidly to table proposals "to address decisively the current crisis, such as the European redemption pact proposed by the German Council of Economic Experts.
The finalisation and ratification of a European Stability Mechanism treaty (...), eurobills as well as joint management of sovereign debt issuance". The resolution was passed with 515 votes in favour, 125 against and 52 abstentions. Next steps. The Economic and Monetary Affairs Committee is now preparing an own-initiative resolution, under the stewardship of Sylvie Goulard (ALDE, FR), which will provide a more detailed reaction to the Commission's green paper.