This week Paolo Savona, chairman of Italy’s Consob regulator, pleaded for it in the Financial Times. His support was interesting, since last year he was barred from serving as finance minister because of his record of support for Italy leaving the euro.
In an ideal world, a common bond might be a nice idea. Supporters believe that to avoid another crisis, the eurozone must move towards fiscal union, even if not all the way. This would be a good first step, in which German taxpayers would recognise how much they get from being in the euro and put something back.
Outside the window, the world is far from ideal. While most citizens still want to be in the EU, there is no grassroots appetite for further integration.
A common bond would be debt mutualisation: if a weak state could not pay, the others would have to or let the bond default. Even in good times, the better credits would overpay for their debt to subsidise the weaker. That would be a gift to Eurosceptic populists.
There is no evidence the market wants a new “safe asset” — investors are quite happy with Bunds, which would certainly trade inside any new eurozone bond.
Nor would it save the likes of Italy from high debt costs: they would still have mountains of debt outside the vehicle, which would effectively be subordinated, since the common bond would have implicit or explicit seniority.
Mutual help is right and good in a crisis, and the eurozone now has mechanisms for it. In normal times, a country’s credit should stand on its own.