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NOTE: This paper was originally published in September 2012 and details the technical aspects of creating the TEF. The political background has been updated to cover the developments around and after the December 2012 European Council and is contained in “Bolstering the Still-Fragile Euro: A Plan for a Temporary Eurobill Fund” (link)
Contents of the full paper
(To access the full paper, click on the link at the foot of this page)
Mutualisation of Euro Area Debt: Is it Sensible? Is it Credible?. 5
The Established Precedents of pro rata Guarantees. 7
Detailed Proposal for a pro rata Temporary Eurobill Fund. 11
Participation and Exclusion. 11
Ireland and Portugal Eligible after 2013. 14
Impact – from the Market’s Perspective. 15
Impact - from Guarantor’s Perspective. 16
Maturity of Issues: Up to two-year. 17
Interest Rate payable by the Member States to the Fund. 18
Setting up the Temporary Eurobill Fund. 19
The Benefits of a Temporary Euro Eurobill Fund. 20
A powerful pro-Growth Concept by restoring Confidence. 20
Ensuring the Liquidity to make euro area Government Debt Sustainable. 20
Improving Bank Capital Ratios as Government Bonds recover. 21
A “least risk” Asset for Banks etc. to re-create an effective Single Financial Market21
Reducing the Links between Banks and Sovereigns. 21
Boosting bank lending to the broader economy. 22
A European Commitment: Five-to-Seven times the Size of US TARP. 22
A large Disciplinary Mechanism for Governments to maintain Reform Pressure. 22
Appendix: Participants in the ELEC Working Group. 22