What is a euro-bond?

"Eurobond" (also called E-bond, stability bond, or eurozone bond) is debt paper that would be jointly issued and guaranteed by the Eurozone countries (countries of the Eurozone). They are seen by many as a possible solution to the European debt crisis and the consequences of the coronavirus crisis (2020).

Eurobonds would lower the cost of borrowing for weaker Eurozone countries (also called "euro sinners"), while it would become more expensive for stronger countries such as Germany and the Netherlands to borrow. This is because the interest on these bonds would be higher than what stronger countries currently pay, and lower than the rates for the weaker countries. That is why there is sometimes mockingly spoken of 'interest socialism' and the risk of 'moral hazard'.

Strict requirements regarding budgetary discipline and economic reforms would be imposed when introducing Eurobonds to prevent countries from handling their finances irresponsibly. Several prominent economists are of the opinion that the introduction of Eurobonds is necessary to make the Eurozone more stable and less vulnerable.