Preview: Should Germany issue perpetual bonds for European solidarity? - Discussion of the proposal by George Soros

On December 4 at 4 pm CET, INET and the Young Scholars Initiative will host a discussion on the future of European fiscal capacity.




3. DECEMBER 2020



Earlier this year, George Soros, Chairman of Soros Fund Management and the Open Society Foundations, made headlines suggesting an extraordinary measure to finance European recovery and to address climate change: The EU should issue perpetual bonds to raise the EU budget. As the name suggests, the principal of these bonds never has to be repaid, only the annual interest payments are due. This means, compared to the highly controversial corona bonds, the degree of mutualization would be much lower.


This week, Soros reaffirms his view that perpetual bonds could help the EU overcome its deadlock in an op-ed in the Project Syndicate and writes that the case for issuing perpetual bonds had never been stronger, with Hungary and Poland vetoing the EU budget and COVID recovery fund. But this time, he proposes that individual member states should issue perpetual bonds since an issuance by the EU is not possible as investors have lost faith that the political bloc will survive. Soros argues that the veto by Hungary and Poland could be overcome by employing the so-called enhanced cooperation procedure formalized under the Lisbon Treaty, setting a budget for a sub-group of member states and funding it through the issuance of perpetual bonds by those member states whose continued existence would be readily accepted by long-term investors.


On December 4 at 4pm CET, Thomas Fricke (Director of the Forum for a New Economy) will discuss the proposal for perpetual bonds and the future of European fiscal capacity together with Peter Bofinger (University of Würzburg), Philippa Sigl-Glöckner (Dezernat Zukunft) and Anatole Kaletsky (GaveKal Dragonomics). The event is hosted by the YSI Political Economy of Europe Working Group and will be moderated by Robert Johnson (INET).


Join the discussion and register for the event – here.



The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.