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A European safe asset: new perspectives
[Actif sûr européen : nouvelles perspectives]

Author

Listed:
  • Gossé Jean-Baptiste,
  • Anass Mourjane.

Abstract

A genuine European safe asset would have several benefits for financial stability and European integration and would facilitate the financing of public policies by reducing borrowing costs. Many proposals aim at creating a European safe asset, often backed by national sovereign debt. These proposals are complex to implement: in addition to political issues, legal constraints complicate their adoption, and the determinants of the associated borrowing costs remain uncertain. The European Union’s measures in response to the Covid-19 crisis are fostering the emergence of a new supply of supranational debt to help Member States meet the challenges posed not only by the health crisis, but also by global warming and technological transition. While this new supply of safe assets is temporary and still limited compared to other currency areas, it nevertheless constitutes an important step for the European bond landscape due to its critical mass effect, which reduces liquidity risk Un véritable actif sûr européen présenterait plusieurs avantages pour la stabilité financière et l’intégration européenne et faciliterait le financement des politiques publiques en réduisant les coûts d’emprunt. De nombreuses propositions visent à créer un actif sûr européen, souvent adossé aux dettes souveraines nationales. Ces propositions sont complexes à mettre en oeuvre : outre les enjeux politiques, des contraintes légales compliquent leur adoption, et les déterminants du coût d’emprunt associé demeurent incertains. Les mesures de l’Union européenne face à la crise Covid-19 favorisent l’émergence d’une offre nouvelle de dette supranationale pour aider les États membres à répondre aux défis posés par la crise sanitaire, mais aussi par le réchauffement climatique ou la transition technologique. Si cette offre nouvelle d’actifs sûrs est temporaire et encore limitée par rapport à d’autres zones monétaires, elle constitue néanmoins une étape importante pour le paysage obligataire européen par son effet de masse critique réduisant le risque de liquidité.

Suggested Citation

  • Gossé Jean-Baptiste, & Anass Mourjane., 2021. "A European safe asset: new perspectives [Actif sûr européen : nouvelles perspectives]," Bulletin de la Banque de France, Banque de France, issue 234.
    • Handle: RePEc:bfr:bullbf:2021:234:06
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    References listed on IDEAS

    as
    1. Giudice, Gabriele & de Manuel Aramendía, Mirzha & Kontolemis, Zenon & Monteiro, Daniel P., 2019. "A European safe asset to complement national government bonds," MPRA Paper 95748, University Library of Munich, Germany.
    2. Grandia, Roel & Hänling, Petra & Russo, Michelina Lo & Aberg, Pontus, 2019. "Availability of high-quality liquid assets and monetary policy operations: an analysis for the euro area," Occasional Paper Series 218, European Central Bank.
    3. Jakob von Weizsäcker & Jacques Delpla, 2010. "The Blue Bond Proposal," Policy Briefs 403, Bruegel.
    4. De Grauwe, Paul & Ji, Yuemei, 2018. "How safe is a safe asset?," CEPS Papers 13472, Centre for European Policy Studies.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Tilman Bletzinger & William Greif & Bernd Schwaab, 2022. "Can EU Bonds Serve as Euro-Denominated Safe Assets?," JRFM, MDPI, vol. 15(11), pages 1-13, November.
    2. Jochem, Axel & Lecomte, Ernest, 2024. "Risky sovereign bond holdings by commercial banks in the euro area: Do safe assets availability and differences in bank funding costs play a role?," Discussion Papers 35/2024, Deutsche Bundesbank.
    3. Bletzinger, Tilman & Greif, William & Schwaab, Bernd, 2023. "The safe asset potential of EU-issued bonds," Research Bulletin, European Central Bank, vol. 103.

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