Michael Hüther, director of the Institute of the German Economy (IW), is advocating for a joint European debt issuance. According to a paper titled “The Euro as an International Reserve Currency,” reported by the newspaper “Handelsblatt”, Hüther asserts that comprehensive institutional reforms are necessary to establish the Euro as a serious global currency. Central to this advancement, he argues, is the completion of the European capital market union and the creation of a unified European reference value through common safe assets, specifically Euro-Bonds.
Hüther told the newspaper that Europe must seize the opportunity presented by the loss of confidence among investors, which political actions by US President Donald Trump are causing. He acknowledged the concerns of critics of Euro-Bonds, however, specifying that his proposal does not involve combining the national debts of all member states. Instead, a European Investment Union could be limited to clearly defined projects, such as infrastructure, energy, digitalization, or defense. Furthermore, he intends to link common debt to conditions, suggesting that certain benefits of European borrowing could only be fully granted to a country if it commits to necessary reforms.
This view is supported by several figures, including former Bundesbank President Joachim Nagel and Isabel Schnabel, who sits on the Governing Council of the European Central Bank (ECB). Additionally, Jeromin Zettelmeyer, head of the Brussels think tank Bruegel, supports the idea. Zettelmeyer stated that Euro-Bonds represent a clear and orderly method of financing shared European projects because “responsibility and control are then in the same hands.” This proposal comes as Chancellor Friedrich Merz (CDU) has opposed new EU debt issuances.
