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Sandbu, Martin

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Financial Times Deutschland - Germany | 26/08/2011

Issue euro bonds without Germany

The Eurozone should issue joint bonds without Germany's participation, writes the liberal business paper Financial Times Deutschland: "The total value of all US government bonds in circulation amounts to 6.6 trillion euros. ... This stands in stark contrast to Europe's fragmented national bond market. At the end of 2010 Italy had bonds in ciruclation amounting to 1.5 trillion euros, Germany had 1.4 trillion and France 1.3 trillion. Investors can sell these bonds off far more easily than American or Japanese securities. If they decide to get rid of their European bonds, it will cause far more of a shock than in large markets. ... The Eurozone must issue joint bonds but without Germany and its like-minded partners, the Netherlands, Austria, Finland and Slovakia. Greece would also have to be excluded - the country needs special treatment in any event. The remaining eleven countries could create a bond market worth 3.5 trillion euros, one whose marcro-economic data would only be minimally worse than for the Eurozone as a whole."

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