MNI BRIEF: ECB's Lane-Subset EU States Could Issue Joint Bonds

ECB Chief Economist  Philip Lane urged steps to expand the stock of supranational EU bonds in a speech on Wednesday in Brussels and suggested that a smaller group of countries could go ahead on their own.

Lane said an expanded market of such bonds would make a capital markets union more attractive to international investors.

"Moreover, as it stands, the stock of supranational euro bonds is currently projected to shrink over time, in view of the scheduled repayment of the NGEU bonds and, over time, the retirement of ESM bonds as the ESM loans get repaid,” he said. (See MNI: Joint Europe Defence Funding In EC Budget Talks-Officials)

"From a public finance perspective, it is natural to match European public goods with common debt in order to align the financing with area-wide benefits of such public goods. In addition to EU-wide initiatives, there could also be scope for common issuance by sub-groups of member countries in the context of possible “coalition of the willing” shared investment projects."