The Euro-nomics Group presents a new proposal to address the Eurozone crisis
PRESS RELEASE
For Immediate Release
Contact: Elisabeth Donahue, 609 258 5988
edonahue@princeton.edu
With the ongoing European sovereign debt events posing an escalating threat to the stability of the global financial system and new plans being offered daily, we share a brand new proposal to address the Eurozone crisis from a consortium of European economists at Columbia Business School, Columbia University, the LSE, NYU Stern, Princeton, Trinity College Dublin and the University of Naples. Each consortium member’s expertise focuses on different EU nation members’ economies, and together they have a nuanced understanding of how different reforms will impact EU nations and the global economy.
Having formed this collaborative group, called Euro-nomics, these economists propose to create European Safe Bonds, called ESBIES.
The premise:
- The world seeks safe assets
- European financial systems and states are caught in a diabolical loop
- Markets for Eurozone sovereign debt are severely distorted
The value proposition for ESBIES:
- To make European banks safer
- To offer some relief to troubled countries through lower interest rates
- To create a market for safe European assets, akin to US Treasuries, for which there is great demand
How ESBIES work:
- ESBIES achieve safety through the triple virtues of pooling, tranching and credit enhancement
- Unlike Eurobonds, ESBIES can be implemented under existing European treaties and there is no common bail-out structure
Attached is an Executive Summary, which can also be found on the group’s website, Euro-nomics; a detailed Q&A, the full report, and published op-eds on this topic can also be found there. If you would like to arrange an interview with Markus Brunnermeier, Edwards S. Sanford Professor of Economics at Princeton and a member of this working group, please contact Elisabeth Donahue at the email/phone listed above.
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