Structured Common Project Financing (SCPF): Efficiency without Debt Mutualization

Christian Bauer and Marc-Patrick Adolph

No 2020-02, Research Papers in Economics from University of Trier, Department of Economics

Abstract: We propose Structured Common Project Financing (SCPF) as a stable, beneficial and political feasible financing tool for special purposes, e.g. Corona-Bonds, Green Deal Financing, Common Forces Budget. SCPF is an ABS-based common financing tool managed by a supranational organization like the ESM or the EIB. Our approach allows overcoming the huge and emotionally influenced political obstacle of joint liability by marginalizing the degree of jointness. SCPF creates significant interest savings compared to individual financing, 0.6% p.a. in the benchmark case. It is stable over time, robust to the emission of subgroup scenarios as e.g. a PIIGS bond and an EU-6 bond, and insensitive to the evolution of the macroeconomic environment (risk-free interest rate).

Keywords: Structured Common Project Financing; Joint Liability; Fiscal Union; EMU; Sovereign Debt; ABS; Corona-Bonds (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020
New Economics Papers: this item is included in nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:trr:wpaper:202002

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