(Nov 8): As the Netherlands continues efforts to form a new government, its central bank chief and ECB Governing Council member Olaf Sleijpen cautioned against signing off too easily on joint European bonds.
“The risk with eurobonds is that they ultimately only lead to higher debt,” Sleijpen told the Dutch newspaper De Telegraaf in an interview published on Saturday.
While Sleijpen noted that it’s up to politicians “to decide about eurobonds,” the issue has split parties negotiating a new government after the Oct 29 election. Most right-wing groups oppose the idea, while centrist and left-leaning parties back it, including Democrats 66, which received the most votes and is now leading coalition negotiations.
In the case that eurobonds are introduced, Sleijpen stipulated as a strict condition that countries not complying with budgetary rules “should make an extra effort to reduce their debt at the national level”.
“As far as I am concerned, total debt ratios must fall, both national and European debt combined,” he added.
The central banker’s remarks mark a shift from those of his predecessor, Klaas Knot.
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Knot, who stepped down at the end of June, saw “clear advantages” in eurobonds and criticised what he called “hyperventilation” and “lack of rationality” in the Dutch debate, particularly over the European Commission’s €800 billion (US$925 billion, or RM3.86 trillion)) defence plan, of which €150 billion would be jointly funded.
While Sleijpen said there’s a “good case to be made” that Europe needs to do more in terms of defence spending and public investments, he said options other than joint debt could be explored first, including to reform the existing EU budget.
“You can build Europe with or without eurobonds,” he said. “It’s not the case that you’re pro-Europe if you do it, or that you’re anti-Europe if you don’t want eurobonds.”
Uploaded by Liza Shireen Koshy
