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European Central Bank Governing Council member Fabio Panetta renewed pressure on the continent to jointly issue bonds — calling it a “critical” step for the common currency, despite political resistance.
“A scarce supply of safe euro-denominated assets is perhaps the single most important constraint on the Capital Markets Union, and hence on the global reach of the euro,” the Italian central bank chief said Friday in a speech in Riga, Latvia.
“In a politically volatile world, a country that issues an international currency is less exposed to financial pressures from other, possibly hostile, nations,” he said. The euro’s fate “shapes Europe’s role in the global economic and financial landscape.”
The remarks come as Europe, still reeling from Russia’s war in Ukraine, frets about a possible return of Donald Trump to the White House. ECB President Christine Lagarde has said that the best defense against another Trump term is further integration. But common bond issuance is controversial in places like Germany that are wary of pooling debt with nations they consider fiscally irresponsible.