European Sovereign Bond-Backed Securities – a Proposal to Mitigate Risks Arisen from the Lack of an Euro Area Common Fiscal Policy

Munteanu Bogdan ()
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Munteanu Bogdan: National School of Political and Administrative Studies, Bucharest

Ovidius University Annals, Economic Sciences Series, 2017, vol. XVII, issue 1, 57-62

Abstract: “European Sovereign Bond-Backed Securities†explores the complexities of having a fiscal unionfor Euro Area. All measures taken for fiscal integration are elements that need cohesion in order tobreak the vicious circle of unsustainable public debt affecting the balance sheets of banks anddeepening the need for rescue, which signals a further deterioration in asset valuation and marketsshrinking, worsening further the economic conditions. The need for a synthetic bond obtained bysecuritization of Euro Area governments’ debts emerges as viable proposal to break this public debt– private debt circle. Furthermore, it explores the “impossible trinity†(Mundell-Flemming) and thetranslation into the Euro Area. The conclusions point to the need for institutionalized and officialapproach of introducing such derivative products like European Sovereign Bond-Backed Securitiesin the quest for safe assets, aiming to break the circle of debt (effect) by substituting the absence of acommon fiscal policy (cause).

Keywords: European Safe Bonds; Sovereign Bond Backed Securities; Fiscal Policy; Trilemma; Synthetic Eurobonds (search for similar items in EconPapers)
JEL-codes: E44 E60 E62 F32 F33 F34 F36 F45 G01 G15 G21 G28 H63 H81 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xvii:y:2017:i:1:p:57-62

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