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A large investor of Hungarian descent admits in a project published in Project Syndicate that the EU cannot now issue such a platform due to uncertainty about its future and the division of member states, but member states can and should.
So the point is that Member States should issue perpetual annuity bonds instead of the EU.
While Poland and Hungary have vetoed spending, the “stingy five” – Austria, Denmark, Finland, the Netherlands and Sweden – are more interested in saving than contributing to the common good, Soros says. Investors say they will only buy perpetual annuity bonds if they believe the issuer will exist for the foreseeable future. This was true in 18th century England and the 19th century America, but unfortunately it is not true in today’s EU.
According to the investor, the EU is in more trouble now than in the first wave of the epidemic, as the fiscal reserves of the Member States are running out and the economic recovery will require an amount much larger than the budget and 1.8 billion euros from the recovery fund. However, with the issuance of perpetual annuity bonds, this framework could be multiplied.
The EU could easily bypass the Hungarian and Polish vetoes if the so-called enhanced cooperation procedure formalized by the Lisbon Treaty were applied for further integration of the euro area. The advantage of this is that some Member States could work together more closely to achieve fiscal targets (and thus a common issue of aprons).
According to Soros, there is a huge unmet demand for long-term aprons in Europe from insurers and other investors. Initially, since they don’t know about the bonus, they would expect a premium, but later it would probably go away.
According to Soros, it would be a wonderful gesture if some EU member states guaranteed the issuance of bonds from weaker countries, such as Italy, in a spirit of solidarity.
Cover image: Shutterstock
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