June 25th, 2012
03:42 PM GMT
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London (CNN) – Eurobonds will be back on the agenda at the euro crisis summit later this week, with one source telling me there will be “more than twenty different types” under discussion.

Such bonds - a way to raise cash backed by all 17 eurozone countries – have long been floated as one panacea to the bloc's financial crisis but the idea has been stymied by political resistance, largely from German chancellor Angela Merkel.

But as the crisis continues to rumble on the introduction of eurobonds looks increasingly likely. And the ascendancy of eurobond advocate Francois Hollande, France’s new president, has thrown weight behind the idea.

According to my European Union source, the structure of a eurobond could vary from being a “project” bond - used to fund construction, for example - to funding for the entire bloc.

European council president Herman Van Rompuy is due to issue a draft communiqué to member states Monday night outlining the ideas, and also plans for a growth pact agreed last week.

The communiqué will also detail the creation of a banking union with deposit insurance - although my source tells me questions are already being raised around how this would be contained to the eurozone’s 17 nations rather than the European Union’s 27.

“Mr Van Rompuy's aim is to get the leaders to get closer towards a commitment on these options by the end of the year,” the source noted.

But investors are already skeptical. Frederick Shepperd, chief executive of Shepperd Investors AG, in Zurich, told me there is a “real disconnect” between the financial options of central banks and the need to boost euro economies.

“The financial solutions treat the symptoms and not the real cause, just like the solutions for Wall Street did not help as solve the problems of Main Street," he said.

The pressure to create a unified financial solution had the potential to create even more problems, Shepperd warned.

"There might be public pressure to support greater integration of Europe, but there is a major voter trend away from integration. Politics and economics are at an impasse and politicians may not be able to make the proper decisions to avoid an even greater crisis.”

While the world is clamoring for leaders to “do the right thing,” that right thing depends on who you talk to, Shepperd said. “There is not an economic and political consensus in Europe at this time," he added.

soundoff (8 Responses)
  1. Max

    CNN why do you always use skeptics to respond to European developments intead of giving an equal voice to the proponents like a real news channel should. Yet you do the opposite for the United States downplaying just about any US problem or pointing the finger at Europe or China or anyone but the US. For years you wrote stories about how the Euro was soon going to collapse (NOT news but cheap speculation or should we say: fear mongering). And now that it doesn't happen you start ridiculing Europe on other levels. Real fair and balance you got going there. You do the same cheapsots with China. Shame on you people. Very big shame.

    June 25, 2012 at 7:33 pm |
  2. Thomas Swillinger

    I agree completely. CNN’s thinly veiled attempts to spread fear regarding the Euro are well known. Fortunately, all one has to do is look up the exchange rates just after reading a CNN headline like “Euro plunges on Greece fears.” In most cases, the drop is miniscule, even normal a fluctuation for a currency, something like one or two cents on the dollar. And when the Euro is up, do you think it’s mentioned by CNN? Of course not…. Fortunately, most people go to CNN just to get caught up on headlines. For analysis, people go elsewhere, of course.

    June 25, 2012 at 11:09 pm |
  3. my-qq-number-907525127

    Europe needs a lot of money to support the confidence of investors. No Euro bond no money, no QE no money, the ECB must be allowed to fund individual government, the law must be changed.It is wrong for the germany to think that a fiscal union could control the budget of governments in the future. So long as governments have its own armies or soveriengty, no restraint is possible to cast on them. lazy people will forever be lazy, overspending habit will always last. A fiscal union will not solve these fundamental problem. The best way is to introduce two currencies in one countries. If greek must borrow through its national debt papers, it must be in drachma. and people in greece can choose to save the money in euro or drachma. This will avoid the overspending habit to interfere the value of or confidence on the euro. Money is short, print money or borrow them through euro bond. face the reality, forget about the idealism of having a controlled fiscal expenditure.

    June 26, 2012 at 5:01 am |
  4. Roelof

    Why would a country like Holland want Euro bonds? We pay 0% interest on our bonds. I wonder if Hollande would know why Holland is paying 0% interest. Because we've got blue eyes.

    June 26, 2012 at 4:24 pm |
  5. Roelof

    Actually financial markets should pay interest when they buy our bonds.

    June 26, 2012 at 4:33 pm |
  6. Laurence

    I see a lot of people are assuming that a Eurobond would be the average of all the member bonds . On the face of it ,it sounds reasonable but economics is not physics .there are other variables outsides the hard numbers.What makes some of the weaker members vulnerable are often not only to do with the health of the banks but combined in a death spiral of speculative attacks , fear mongering and lots of the affluent patriotic citizens *leaving the sinking ship *
    Such things could happen to the EZ as a whole but the effects would likely ( in my opinion ) be miner if anything whereas possible advantages of stability due to sheer size and hopefully some intelligent Eurowide banking regulations that eliminates some of the "financial arbitrage " that Ireland and others suffered the consequences of.
    Politically , sovereignty is a Hot Potato , sure ring the blind patriotic sovereignty bell ,rally up the outrage , loss of control of our banking sector as in we ever had any
    Banks: Where to begin , Banks are local when they accept or refuse a loan ,They are international when they're speculating .It is only when they're in trouble that they are national ,leaving the citizens of the country's holding the bill

    June 27, 2012 at 11:10 am |
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    July 29, 2012 at 5:05 am |
  8. Credit guidance

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    August 10, 2012 at 10:08 am |

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