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Understanding Peter Bofinger’s euro-bundles
His proposal for a Eurobond, as an instrument of fiscally consolidating the Eurozone, was soundly rejected by the German Chancellor. Now, with an ECB paralysed in the face of a major deflationary onslaught, Professor Peter Bofinger comes up with a variant of the rejected Eurobond, which he calls ‘Euro-bundles,’ only this time as an instrument that will bolster the ECB’s monetary policy defences against deflation; and one that may offer a modicum of hope that the Eurozone can salvage a degree of integrity after four years of fragmentation.
What exactly are Mr. Bofinger’s Euro-bundles? In what follows, I sum up his scheme and then pass on the baton to George Krimpas who asks some pertinent questions of Mr. Bofinger. My own views on Euro-bundles will appear in a follow-up post shortly
Euro-bundles: A primer
Some background to Professor Bofinger’s latest intervention
Peter Bofinger is a rare German economist. From the moment that the Euro Crisis erupted, and while a member of the German Chancellor’s Council of Economic Advisers, he fought a lonely campaign in favour of a common Eurozone bond; a Eurobond; a common bond severally and jointly issued and backed by all member-states.