Eurobonds needed to fix debt crisis, says Soros
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Europe needs a eurobond regime to solve its sovereign debt crisis, according to George Soros, a prominent investor. The success of such a scheme, however, relies on compromise from Germany.
George Soros
Writing in the Financial Times, Soros says eurobonds, along with reform of the banking system and an exit mechanism, are essential for a “comprehensive solution” to the eurozone’s debt problem.
Eurobonds, which would be jointly guaranteed by all the monetary bloc’s members, would be the best way of allowing heavily-indebted states to refinance their debt on the same terms as countries running a surplus, he says.
This regime would permit indebted countries such as Greece to avoid the heavy risk premiums that make their debt unsustainable and would reinforce the convergences that the introduction of the euro was supposed to encourage, but failed to do so.
However, the investor adds that the success of a eurobond programme depends on the willingness of Germany to adjust its macroeconomic policy to better support the bloc’s other members.
“What works for Germany cannot work for the rest of Europe: no country can run a chronic trade surplus without others running deficits. Germany must agree to rules by which others can also abide,” he writes.
Soros also argues that all new issues of debt by eurozone countries should be in eurobonds, with those putting out a greater volume subject to the imposition of conditions on their financial management by the board overseeing the regime.
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