Eurobonds past and present: a comparative review on debt mutualization in Europe
This paper reviews the economic and historical literature on debt mutualization in Europe with reference to pre-1914 guaranteed bonds and current Eurobonds debate. We emphasize that, notwithstanding the differences in scale and nature, debt mutualization solutions similar to Eurobonds were tried bef...
| Main Authors: | , |
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| Format: | Journal article |
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De Gruyter
2016
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| _version_ | 1797068766130995200 |
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| author | Ferreira Da Costa Esteves, R Tuncer, A |
| author_facet | Ferreira Da Costa Esteves, R Tuncer, A |
| author_sort | Ferreira Da Costa Esteves, R |
| collection | OXFORD |
| description | This paper reviews the economic and historical literature on debt mutualization in Europe with reference to pre-1914 guaranteed bonds and current Eurobonds debate. We emphasize that, notwithstanding the differences in scale and nature, debt mutualization solutions similar to Eurobonds were tried before, and the closest historical examples to the present debate are the pre-1914 guaranteed bonds. We highlight three key characteristics of debt mutualization, which are apparent both in the current debate and in history: moral hazard, debt dilution and conditionality. We show thatthe fears about short-run dilution and moral hazard were not unknown to pre-1914 market participants. These problems were partly addressed by mechanisms of conditionality such as international financial control. The historical evidence suggests that the dilution of outstanding obligations may be overplayed in the current debate. On the contrary, creditors’ moral hazard (ignored in current debt mutualization proposals) was as problematic as the usual debtor’s moral hazard –especially when the groups of countries guaranteeing the bonds and the creditor nations did not overlap entirely. |
| first_indexed | 2024-03-06T22:14:49Z |
| format | Journal article |
| id | oxford-uuid:530698c5-3407-41ac-a6ac-6ef6d8c3f468 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T22:14:49Z |
| publishDate | 2016 |
| publisher | De Gruyter |
| record_format | dspace |
| spelling | oxford-uuid:530698c5-3407-41ac-a6ac-6ef6d8c3f4682022-03-26T16:29:07ZEurobonds past and present: a comparative review on debt mutualization in EuropeJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:530698c5-3407-41ac-a6ac-6ef6d8c3f468Symplectic Elements at OxfordDe Gruyter2016Ferreira Da Costa Esteves, RTuncer, AThis paper reviews the economic and historical literature on debt mutualization in Europe with reference to pre-1914 guaranteed bonds and current Eurobonds debate. We emphasize that, notwithstanding the differences in scale and nature, debt mutualization solutions similar to Eurobonds were tried before, and the closest historical examples to the present debate are the pre-1914 guaranteed bonds. We highlight three key characteristics of debt mutualization, which are apparent both in the current debate and in history: moral hazard, debt dilution and conditionality. We show thatthe fears about short-run dilution and moral hazard were not unknown to pre-1914 market participants. These problems were partly addressed by mechanisms of conditionality such as international financial control. The historical evidence suggests that the dilution of outstanding obligations may be overplayed in the current debate. On the contrary, creditors’ moral hazard (ignored in current debt mutualization proposals) was as problematic as the usual debtor’s moral hazard –especially when the groups of countries guaranteeing the bonds and the creditor nations did not overlap entirely. |
| spellingShingle | Ferreira Da Costa Esteves, R Tuncer, A Eurobonds past and present: a comparative review on debt mutualization in Europe |
| title | Eurobonds past and present: a comparative review on debt mutualization in Europe |
| title_full | Eurobonds past and present: a comparative review on debt mutualization in Europe |
| title_fullStr | Eurobonds past and present: a comparative review on debt mutualization in Europe |
| title_full_unstemmed | Eurobonds past and present: a comparative review on debt mutualization in Europe |
| title_short | Eurobonds past and present: a comparative review on debt mutualization in Europe |
| title_sort | eurobonds past and present a comparative review on debt mutualization in europe |
| work_keys_str_mv | AT ferreiradacostaestevesr eurobondspastandpresentacomparativereviewondebtmutualizationineurope AT tuncera eurobondspastandpresentacomparativereviewondebtmutualizationineurope |