We have seen how German policy experts like Otmar Issing have argued against Euro Bonds. Now, we get a cogent argument in favour of thee debt instruments via Wolfgang Munchau of Eurointelligence. Munchau recently penned an FT column making the case for more fiscal federalism in Euroland. The interview with Bloomberg’s Andrea Catherwood below supports that piece. Munchau has also argued that the Euro Zone is inching toward break-up. He clearly sees the sovereign debt crisis in Europe as existential and believes Eurobonds would go a long way in repairing the fractures.
Note that the proposal for E-bonds introduced by Juncker and Tremonti that Munchau talks about is identical to the mechanism I laid out last week. I talked about this as a way of insuring liquidity to the periphery. Munchau argues specifically that this would be a funding mechanism after the European bailout fund (EFSF) runs out in 2013.