The future of economic governance in the EU - European Union Committee Contents


CHAPTER 5: A crisis management framework for the EU

194.  The crisis in the euro area brought to light a significant omission in the economic governance arrangements of the EMU: the absence of a crisis management framework. This deficiency has been exacerbated by the 'no bail-out' clause[257] of the TFEU. As the crisis unfolded, uncertainties as to whether the EU was going to support countries experiencing financial difficulties led markets to speculate about the resilience of the system, while at the same time increasing the pressures on it.

195.  Professor Pisani-Ferry explained that the founders of the euro had assumed that only a regime to prevent a crisis was needed. They felt that putting in place some sort of crisis resolution mechanism "would have created a moral hazard and therefore would have done more harm than good".[258] The euro area now finds itself dealing with the immediate crisis without a mechanism for crisis management, while simultaneously trying to put in place a framework for crisis management in the future.[259]

196.  This chapter reflects this perspective and distinguishes between the measures put in place by the EU to mitigate the ongoing crisis, and those to put in place a more permanent system for the future.

The current crisis: towards 2013

197.  To provide a bulwark against the market speculation, the EU's leaders agreed in May 2010 to create two temporary funds to provide liquidity to affected economies. The European Financial Stabilisation Mechanism (EFSM) provided €60 billion underwritten by all 27 EU Member States; the larger European Financial Stability Facility (EFSF), funded and available only to the euro area, had funding of up to €440 billion. The EFSM[260] was under-written by the EU budget and was established under Article 122.2 of the Treaty on the Functioning of the European Union (TFEU), which provides for temporary assistance to a Member State when it is in "difficulties or is seriously threatened by natural disasters or exceptional circumstances beyond its control". The EFSF, in contrast, was created as a new entity, called a Special Purpose Vehicle, with a limited life span of three years. In addition, the IMF agreed to make available a credit line of up to €250 billion, making a total of €750 billion.

198.  These decisions succeeded in easing tensions somewhat, but there were continuing pressures on vulnerable Member States. By late autumn 2010, Ireland had become the focus of attention and was eventually obliged to accept a rescue package. The overall package was of a similar order of magnitude to that offered to Greece, and included funds from the EFSM and EFSF, and again an IMF contribution. There were some key differences, however. First, some €35 billion of the Irish facility was to be available for direct support of Irish banks and, secondly, part of the funding was in the form of direct bilateral loans from the UK (€3.44 billion), and Sweden and Denmark (€0.9 billion combined).

PRIVATE SECTOR INVOLVEMENT

199.  During discussions on the establishment of a permanent crisis mechanism (due to come into existence from 2013) to replace these two temporary mechanisms, public declarations by politicians that the private sector would have to bear some of the costs of the crisis spread unease among bondholders, leading to an increase in the interest rates of sovereign bonds of peripheral countries. We discussed the shortcomings of the euro area's communications with the markets in Chapter 2.[261]

200.  Mr Leandro was clear that this was a misunderstanding. He said that a statement made by the finance ministers of France, Germany, Italy, Spain and the UK during the G20 meeting in Seoul stated unequivocally that "private sector involvement does not apply to outstanding debt … it will apply only under the new mechanism after 2013".[262]

201.  This assertion was commented on by several witnesses. Professor Buiter's view was that this was "a commitment they could not make".[263] He argued that "the only debt that's likely to be restructured in the near future—there will be sovereign debt restructuring—is the old debt".[264] Dr Annunziata also argued that it was "sidestepping the problem" to say that only debt issued after 2013 would be subject to haircuts,[265] adding that "the problem we are facing today is that a number of European countries are saddled with substantial amounts of public debt".[266]

202.  While we recognise that some observers believe that there will inevitably be haircuts for bond-holders on currently issued sovereign debt, we heard evidence that this would lead to further market unease and contagion.[267] Under these circumstances, we support the Government's position that, to uphold market confidence, there must be no haircuts for bond-holders in the short-term. This may be difficult to achieve, and every effort should be made to ensure that those countries currently financing large public debts with help from their EU partners, including through the EFSM and EFSF, are able to continue to do so until a new permanent mechanism can be brought in from 2013.[268] The Irish election campaign has shown that there will be pressures to ease the burden on the two countries that have received rescue packages. Difficult compromises may have to be reached between citizens in these countries and bond-holders in others. The recent decision to reduce the interest rate charged to Greece reflects the recognition that Member States in trouble can only do so much. We welcome the recent decision by euro area Member States to increase the size of the lending capacity of the EFSF. Member States should make clear that the EFSM and EFSF could be increased again, if necessary, to ensure that any countries in difficulties will have access to sufficient liquidity support.

203.  The finance ministers of France, Germany, Italy, Spain and the UK have stated that there will be no losses for the private sector on sovereign debt issued before a new permanent crisis mechanism comes into force in 2013. While we recognise that this commitment may be necessary to maintain market confidence in the euro area in the short-term, we are doubtful that it will prove sustainable. It implies a significant burden upon citizens in the debtor countries; a burden that they may find difficult to maintain in the period to 2013 and beyond.

204.  We welcome the recent decision by euro area Member States to increase the size of the EFSF. We recommend that Member States make clear that they will have no hesitation in further increasing the size of the EFSF, if that is necessary, to preserve the solvency of euro area Member States. In addition, we recommend that Member States carefully consider the interest rate on loans given by these two mechanisms to ensure that they do not prove overly onerous on those countries receiving assistance.

ROLE OF THE EUROPEAN CENTRAL BANK

205.  A key principle of the EMU is the independence[269] of the ECB. By separating national fiscal policy and the ECB, the founders of the monetary union believed that monetary policy was safe from being used by policy-makers as a lender of last resort in times of strain on public finances. In the absence of political independence, the central bank can be forced to print money to finance government budget deficits.

206.  While we did not consider the issue in much detail, it became clear during our inquiry that the ECB played a key role in the euro area's response to the sovereign debt crisis through the purchase of Greek government debt[270] and that of other stricken euro area countries (the "Securities Market Programme"). The ECB's intervention was intended to prevent another banking crisis in the EU "where many banks had unknown but potentially significant exposures to fiscally challenged sovereigns."[271] According to Dr Schelkle, the ECB's bond purchase programme showed "that the separation of fiscal and monetary policy cannot always be maintained."[272] Whilst the ECB's programme helped stabilise the markets, it led to strong criticism from different quarters, especially from the out-going President of the Bundesbank Axel Weber[273] and German economists.[274] Dr Mayer and Dr Gros suggested that "a major casualty of the emergency decisions was the ECB. With its move to prop up the failing bonds of governments in financial distress, it has allowed itself to be transformed into an agent of fiscal policy ... in the long run this is likely to undermine confidence in the ECB and the euro." The ECB programme was described as almost equivalent to quantitative easing by Professor Buiter[275] (see Box 10 below).

BOX 10

The ECB and quantitative easing
Article 123 of TFEU forbids the ECB from giving credit to, or purchasing sovereign debt from, sovereigns. However, the Article does not forbid it from purchasing sovereign debt on the secondary markets. Under its newly-created "Securities Markets Programme" it can purchase any private and public securities in secondary markets. The ECB argued that this did not amount to quantitative easing (a policy where central banks create money to buy government debt and other assets to boost the money supply) and that it was acting on the basis of its mandate to preserve financial stability rather than deliberately supporting the liquidity of sovereigns in the euro area. Other observers have suggested that the ECB's "distinction between quantitative easing and asset purchases under the Securities Markets Programme is semantic, not substantive".[276]

207.  Witnesses elaborated on the risks of the ECB's policies. Professor Louis suggested that although the Securities Market Programme was legal, it was a policy "that has necessarily to be temporary" because of its effect on the ECB's balance sheet.[277] According to Professor Buiter the ECB have "at least €67 billion of wonky sovereign debt on their books outright under the SMP [Securities Markets Programme], and they hold a lot more sovereign debt from the peripheral countries as collateral against bank loans, where the banks themselves are, in all likelihood, insolvent in a number of cases".[278]

208.  Dr Mayer envisaged two alternatives if these debts went bad: the ECB would have to be recapitalised, or the bad debt would have to be paid off through creating money. In the first case, Germany, as the largest shareholder, "would have to foot the largest bill". The second alternative would eventually cause inflation.[279]

209.  Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley, said in his article Drawing a line under Europe's crisis that "the ECB, recent events remind us, is a lender and market-maker of last resort and not just the steward of a monetary union … its legitimacy and credibility are at stake".[280]

210.  The ECB's purchase of sovereign bonds has longer-term consequences for its reputation and balance sheet. These should be carefully monitored and assessed. The ECB should consider how to reduce its own exposure to heavily indebted banks and sovereigns by shifting the funding burden to the new European Stability Mechanism (see paragraphs 227-232).

EUROBONDS: THE WAY FORWARD?

211.  The concept of a eurobond has been discussed for a while in some circles in the EU, especially in the European Parliament,[281] but it was never considered seriously until the crisis. The original proposal for a eurobond dates back to Jacques Delors in the 1980s, and was recently revamped by Mario Monti in his report on the Single Market to President Barroso.[282] The debate was given new life after Jean-Claude Juncker, the Luxembourg Prime Minister and President of the Eurogroup, and Giulio Tremonti, the Italian Finance Minister, authored an article in the Financial Times putting forward their idea of how a eurobond might function.[283]

212.  They proposed that new sovereign debt from euro area Member States could be issued in the form of eurobonds through a new European Debt Agency. Up to 40% of the GDP of euro area sovereign debt could ultimately be jointly and severally guaranteed this way.[284] They argued that this expression of commitment to the euro would increase the liquidity available to euro area members and end speculative attacks against Member States. The German Chancellor, Angela Merkel, however dismissed this idea on the basis that it would impinge on fiscal sovereignty and would possibly require a change in the Treaty to achieve.

213.  Our witnesses were generally[285] sceptical about this Eurobond proposal, suggesting that it would encourage moral hazard (Member States would have no incentive to follow fiscally responsible policies since the eurobonds would insulate them from the opinion of the markets) and would require an increased level of fiscal integration. Dr Annunziata explained that "a common Eurozone bond would need to be backed by a common pool of resources, presumably a pooling of tax revenues from the individual governments. This in itself would represent some pooling of sovereignty that government would need to be ready to accept".[286] He suggested that the scheme would require the pooled revenues to be set aside in a separate fund, otherwise all Member States could find their borrowing costs rise if the markets felt some individual Member States posed a high risk. The European Policy Centre agreed and suggested that the challenge would be to make certain that the cost of borrowing for the stronger countries (e.g. Germany) did not rise disproportionately and that there remained a "strong incentive for reform in the highly indebted countries".[287]

214.  Professor Buiter felt that the proposal by Juncker and Tremonti was unfeasible: "it's uncapped ... and would remove any discipline of national sovereigns to keep their fiscal-financial houses in order". He did suggest, however, that it was already possible to issue "jointly and severally guaranteed bonds—eurobonds if you want—under the existing Treaty, provided it is for a project". Since the Treaty does not define what a project is, it might therefore be possible to have "a capped amount of jointly and severally debt issued".[288]

215.  Professor Pisani-Ferry explained another proposed version of a eurobond, designed to mitigate the problem of moral hazard.[289] Common bonds could only be issued up to a certain threshold of GDP. This debt would be senior to the remaining public debt above the threshold, which would remain the sole responsibility of the individual Member States. This would ensure that the risk premiums on the national debt would remain variable, and serve as an incentive for states to maintain responsible a fiscal position.

216.  The Minster told us that "no one has yet come forward with a formal proposal around eurobonds",[290] and added that he believed any issue of a joint eurobond would require a Treaty change to achieve.[291]

217.  Discussions over the feasibility or otherwise of different proposals for eurobonds will continue. Although their proponents suggest that they would help stabilise weaker members of the euro area, there is little consensus on how they might work at the present time. They may well represent a greater degree of fiscal integration than Member States are willing to accept given the current disparities between economies in the euro area.

Towards a permanent crisis resolution mechanism

218.  A number of witnesses told us there was a need for a permanent fund to provide liquidity assistance,[292] although Open Europe argued forcefully against the idea. It gave two main reasons: that it would encourage moral hazard; and that a permanent fund would make taxpayers in one country liable for the mistakes of another.[293]

BOX 11

Liquidity and solvency
The linkage between solvency and liquidity became a recurrent theme during the course of our inquiry. The determination of whether a country is illiquid (a temporary inability to service debt) or insolvent (a long-term inability to service debt) is important to determine the effectiveness of a rescue mechanism. The fine line between illiquidity and insolvency for sovereign states is a question of judgement.

In practical terms, rescue funds such as the EFSM and EFSF facilities may help in case of illiquidity (since they will tide a fundamentally solvent government over a temporary period of difficulty), but will only postpone the problem for countries which are fundamentally insolvent. It has been argued, therefore, that to avoid a severe shock to a system when an insolvent government finally announces it cannot pay back its debts, there should be a debt restructuring mechanism put in place to deal with countries which are fundamentally insolvent.

219.  Other witnesses argued for a debt restructuring mechanism which would provide for an orderly restructuring of an insolvent country's public debt (also described as a managed default). At Germany's insistence[294] the issue was prominent in debates on a permanent crisis mechanism during 2010. Ms Barysch explained why: "they [the Germans] decided that if the discipline can't come from Brussels, it has to come from the markets". The Germans therefore "wanted ... a restructuring clause ... so that we can ask the markets to discipline countries if we can't do it ourselves".[295]

220.  Open Europe felt that an orderly default procedure "would come with several benefits". They argued that it would transfer risk from taxpayers to creditors; reduce moral hazard; and ensure that the markets priced risk correctly by sending a clear message that no euro area country was "too big to fail".[296] Dr Dabrowski took a similar view, noting that "clearly defined rules and procedures of sovereign default ... could help minimise market panics in case of fiscal difficulties in individual countries and would force financial markets to better price ... risks in advance".[297] The Institute for Economic Affairs stated that if market forces were to control governments' behaviour effectively, "reforms ought to be aimed at making a sovereign default look as inevitable an outcome of fiscal irresponsibility as it would in the absence of a monetary union",[298] while Professor Buiter stated such a mechanism was necessary "to deal with those sovereigns that are fiscally unsustainable and insolvent and who, in the absence of fiscal union, need to be restructured".[299]

221.  The Minister raised a note of caution, saying that if sovereign debt were issued with collective action clauses,[300] it was likely to raise the cost of borrowing, particularly if investors were uncertain about the underlying economic health of the Member States concerned. For some Member States, there is a clear risk that the premium would soar and could push them towards a default on existing debt.

222.  In addition to these points, we would suggest that a debt restructuring mechanism would offer a way forward to countries finding their debt burden an insurmountable obstacle to future growth.

A DUAL MECHANISM

223.  A number of witnesses supported the establishment of a mechanism providing both liquidity assistance and debt restructuring.[301] Dr Mayer summarised what he thought its basic functions should be: "to give, in times of emergency and financial distress, emergency financial assistance coupled to adjustment programmes. The second function would be to make a default of a sovereign possible without this causing a systemic shock".[302]

224.  Dr Mayer, with Dr Gros, has previously proposed a 'European Monetary Fund' which he described as 'a European IMF-plus". This mechanism would offer financing, under strict conditionality in the same way as the IMF, but in addition would have "the ability to restructure the debt of an insolvent country".[303] Dr Gros described the advantage of having such an institution: "you need an independent institution ... to take the difficult decisions on whether a sovereign is liquid or insolvent ... The Commission itself is not the proper place, because as a college it is becoming more and more political ... just making ECOFIN partially independent is not enough".[304] Dr Gros and Dr Mayer envisaged financing such an institution through contributions from euro area Member States, in proportion to the risk each country presents. Countries breaching the SGP would therefore pay higher contributions.

225.  Dr Schelkle was supportive of the notion of an independent body: "we need a kind of equivalent of a European Monetary Fund".[305] Dr Annunziata, although he agreed that a permanent fund would be helpful in reducing the risk of systemic instability, questioned why the IMF was not suitable: "it would seem most wasteful to duplicate the features and expertise of the IMF by setting up a European Monetary Fund".[306] If this did happen though, he felt strongly that the expertise of the IMF should be involved: "The IMF, in terms of the design of the adjustment policies, needs to go hand in hand with any external financing and debt restructuring mechanism".[307]

226.  The Government have been reluctant to comment on the possible structure of a permanent crisis resolution mechanism. The Minister made clear that the Government "accept the need for a permanent mechanism", but was not willing to comment in substantial detail since it had been decided that the UK "should be outside it" (see below, paragraphs 235-243).[308]

THE CURRENT PROPOSAL

227.  After EU Member States were forced to provide financial assistance to Greece, and to set up temporary liquidity facilities in the shape of the EFSM and EFSF, the idea of a permanent crisis resolution mechanism (PCRM) started to take shape.

228.  The Commission legislative package on economic governance does not include a proposal for a permanent crisis resolution mechanism. Mr Costello explained that, since the EFSM and EFSF would be operational and providing financial support until 2013, the Commission initially decided to concentrate on the "ambitious package" to reform EU economic governance.[309]

229.  The issue was, however, considered by the van Rompuy taskforce report and the European Council decided in October 2010 to "bring forward that debate".[310] In December 2010 the EU Heads of State reached an agreement on a permanent resolution mechanism—the European Stability Mechanism (ESM). This will replace the EFSF and the EFSM when they expire in 2013. The new ESM will be founded on an inter-governmental basis, and will only be funded by, and available to, members of the euro area. There will be provisions made so that other Member States within the EU can contribute to financial assistance packages on an ad hoc, bilateral basis.

230.  The mechanism will be activated "if indispensable to safeguard the stability of the euro area as a whole". The ESM will provide financial assistance to euro area Member States under strict conditionality, meaning that loans will only be provided if the Member States agree to take certain actions to improve their financial situation. These conditions would be decided on a case by case basis. In addition, from 2013 onwards all euro area government bonds will be issued with collective action clauses that will allow a qualified majority of bondholders to agree on legally binding changes to the terms of payment in the event that the debtor is unable to pay. There are, however, key issues that are still to be defined, such as the size of the mechanism, the terms under which the private sector would be involved, and the governance arrangements.

231.  The European Council have proposed an amendment to the Treaties[311] to establish the ESM. We consider in more detail the practical and legal steps that will be taken to achieve this in our report Amending Article 136 of the Treaty of the Functioning of the European Union.[312]

232.  On balance, the evidence we received was strongly in favour of the establishment of permanent crisis mechanism incorporating both a financial assistance fund and a mechanism for an orderly sovereign default. We welcome, therefore, the Council's proposals for a European Stability Mechanism. The existence of a formal way of restructuring sovereign debt will encourage the market to price better the risks posed by individual Member States within the euro area, and encourage more responsible fiscal behaviour by Member States which will no longer be insulated from market forces by their membership of the euro. Conditionality is a vital element and we support its application. The ECB should be consulted on the terms and conditions of loans under the ESM.

233.  Despite differing views on whether outstanding sovereign debt would have to be subject to haircuts, our witnesses were strongly of the opinion that the private sector had to share the burden under a permanent crisis mechanism. Dr Mayer told us that taxpayers would not accept that "lenders, who in the past have benefited from elevated returns by lending money to the country, would be entirely spared".[313] Dr Annunziata agreed and felt that "some form of private sector participation in the pain of haircuts is necessary and healthy."[314]

234.  We welcome the principle, enshrined in the ESM agreement, that the private sector should share the burden of any restructuring of sovereign debt under the new ESM mechanism. It is only right that as they share in the rewards, they should share the risks.

Should the UK participate?

235.  As noted above, the ESM will be created and financed by the euro area. Non-euro area countries would be able to decide to participate voluntarily in financial assistance packages if they wish. The UK could thus choose to participate on an ad hoc basis.

236.  The UK's involvement in the crisis resolution measures adopted by the EU up to 2011 is significant, though limited by non-membership of the euro. The UK participated in the EFSM (since it was secured by the EU budget), and through its contributions to the IMF was part of the rescue packages to Ireland and Greece. It also contributed separately to the Ireland rescue package through a bilateral loan. It did not, however, participate in the EFSF and the Government have made clear that the UK will not be participating in the ESM.[315] Both these vehicles are limited to the euro area.

237.  We sought views on whether the UK should try to participate voluntarily in a permanent crisis mechanism. Mr Cliffe felt that it was "a political question": should the UK and other non-members "play their part in the interests of the broader stability of the European Union".[316]

238.  Witnesses drew our attention to the UK's interests in euro area countries such as Spain and Portugal. Dr Dadush pointed out that "a credit event in Spain and Italy would have devastating implications for the UK," and wondered "why the UK would be a participant in the IMF, to rescue, say, Thailand, but should stand back if Spain is in trouble".[317] The European Movement UK made the same argument, adding if the UK was outside any permanent mechanism it could not call upon it if needed.[318] The European Policy Centre commented if the UK did not pull its "economic weight" and help weaker Member States in economic difficulties, "future problems in the UK have to be faced alone".[319] The other argument we heard was that if it did not take part "the UK's influence on the design and of the mechanism and on associated policy issues" would be "very limited".[320]

239.  Dr Annunziata thought that although there were strategic issues about the best way for the UK to influence the process, "this is a Eurozone problem ... there is no automatic argument as to why they should be extended to EU members that do not belong to the Eurozone".[321] Professor Chadha was blunt: "there is no need for the UK, as a non-member of the Eurozone, to be involved in any Eurozone crisis fund".[322] The Institute for Economic Affairs disputed the premise that the UK had to be a part of the mechanism to influence the debate: "Britain's influence, in or out of the Eurozone, is a direct function of our economic strength or weakness".[323]

240.  We asked the Minister why the UK was not taking part. He replied, "it is there to underpin the stability of the Eurozone, it is purely a matter for the Eurozone".[324] He clarified the UK's role and influence: "we should be outside it. We can give advice or comments—if that is welcome—on how it should be designed, but it is a matter for the Eurozone to lead on".[325]

241.  This view was echoed by the Minister for Europe to whom we spoke after the December European Council took place. He stressed that "the [ESM] is a mechanism of the Eurozone, by the Eurozone, for the Eurozone".[326] When pressed on whether the UK should have shown more solidarity towards the euro area, in light of UK banks' exposure to EU debt, he responded that the UK had already shown its solidarity by agreeing to a treaty change, providing bilateral support to Ireland and contributing to other Member States receiving assistance through the IMF.[327]

242.  The ESM will be compulsory only for members of the euro area. However, we recognise that it might be in the UK's interests to contribute to rescue packages for Member States in difficulties, as happened with Ireland. In this light, we welcome the recent European Council proposals which will allow Member States outside the euro area to contribute on a bilateral basis when they consider it is in their national interests.

243.  We recognise the expertise of the IMF in this area. The IMF has been involved in the rescue packages provided to Greece and Ireland; we recommend that it should be involved in any future rescue package provided by the European Stability Mechanism.


257   Article 125 prohibits the Union from being liable for the financial commitments of governments. It means that there should be no scope for a Member State to borrow directly from any EU body, including the ECB which is also specifically precluded from directly purchasing government securities (Article 123). In this way the monetisation of debt (printing money) is ruled out, a provision designed to prevent inflationary pressures. Back

258   Q 272 Back

259   Q 396 Back

260   Established by Council Regulation 407/2010 Back

261   See paragraphs 61-63 Back

262   Q 261 Back

263   Q 495 Back

264   Q 496 Back

265   A haircut occurs when a lender has to accept a reduction in the redemption value of a bond because of the inability of the borrower to pay it in full; for example, if only 90 cents is repaid per euro, the haircut would be ten cents (10%). Back

266   Q 134 Back

267   QQ 101 (Professor Goodhart), 135 (Dr Annunziata), 178 (Dr Gros) Back

268   See paragraphs 227-234 for more information on the new permanent mechanism. Back

269   The independence of the ECB and the national central banks of the Eurosystem has a constitutional status, as it has been set down in both the Treaty on the Functioning of the European Union (Article 282.3) and the Statute of the European System of Central Banks rather than in secondary legislation.  Back

270   ECB Press Release, ECB decides on measures to address severe tensions in financial markets (10 May 2010)  Back

271   Buiter W and Rahbari E, "Greece and the fiscal crisis in the Eurozone", Centre for Economic Policy Research Policy Insight No.51 (2010) Back

272   EGE 3 Back

273   Bloomberg, Thesing G and Buergin R, Weber Says ECB Should Phase Out Bond Purchases Now (13 October 2010) Back

274   Bloomberg, Gros D and Mayer T, ECB May Kiss Credibility Goodbye, (May 11 2010) Back

275   Q 488 Back

276   Buiter and Rahbari, "Greece and the fiscal crisis in the Eurozone", op. cit. Back

277   Q 367 Back

278   Q 492. See also Q 53 (Mr Cliffe) Back

279   Mayer T "What more do European governments need to do to save the Eurozone in the medium run?", VoxEU.org (17 June 2010)  Back

280   Eichengreen B, "Drawing a line under Europe's crisis", Remarks at the Ninth annual Munich Economic Summit (17 June 2010)  Back

281   Q 483 Back

282   Monti, A new strategy for the Single Market, op. cit.  Back

283   Juncker C and Tremonti G, "E-bonds would end the crisis", Financial Times (5 December 2010) Back

284   Q 497 Back

285   Although not unanimously-see for example EGE 3 (Dr Schelkle) Back

286   EGE 16 Back

287   EGE 22 Back

288   Q 496 Back

289   Delpa J and von Weizsäcker J, "The blue bond proposal", Bruegel Policy Brief 2010/03 (2010)  Back

290   Q 570 Back

291   Q 572 Back

292   QQ 65-66 (Mr Cliffe), 100 (Professor Goodhart), 172 (Dr Gros), 290 (Professor Pisani-Ferry), 489 (Professor Buiter), EGE 3 (Dr Schelkle) Back

293   EGE 7 Back

294   See Czuczka T, "Merkel's coalition steps up calls for orderly insolvencies in euro zone", Bloomberg (4 May 2010) Back

295   Q 453 Back

296   EGE 7 Back

297   EGE 10 Back

298   EGE 8 Back

299   Q 489 Back

300   Collective action clauses are provisions that allow a qualified majority of bondholders to change the terms of payment. They can facilitate creditor-debtor negotiations in cases where sovereign debt restructuring is necessary.  Back

301   See, for example, QQ 290 (Professor Pisani-Ferry), 489 (Professor Buiter) Back

302   Q 131 Back

303   Q 140 Back

304   Q 172 Back

305   Q 113 Back

306   EGE 9 Back

307   Q 141 Back

308   Q 509 Back

309   Q 261 Back

310   Q 261 Back

311   The EU is founded on two core Treaties: the Treaty on European Union and the Treaty on the Functioning of the European Union. Back

312   European Union Committee, 10th Report (2010-11): Amending Article 136 of the Treaty on the Functioning of the European Union (HL Paper 110). Back

313   Q 133 Back

314   Q 134. See also, for example, Q 155 (Sir Martin Jacomb)  Back

315   Q 508 Back

316   Q 67 Back

317   EGE 18 Back

318   EGE 22 Back

319   EGE 22 Back

320   EGE 22 Back

321   Q 141 Back

322   EGE 5 Back

323   EGE 8 Back

324   Q 558 Back

325   Q 558 Back

326   Q 9 Back

327   Q 1 Back


 
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