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A Proposal to Create a European Safe Asset

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  • Paolo Savona

Abstract

While a consensus has formed that the eurozone's economic governance mechanisms must be reformed, and some progress has been made on this front, what has been agreed to so far falls short of what is needed to address the central imbalances caused by the eurozone setup, according to Paolo Savona. The key elements that are missing from the current package of reforms are interrelated: a common insurance scheme for bank deposits, the possible regulation of banks' sovereign exposure, and the existence of a common safe asset. Savona outlines a proposal to increase the supply of safe assets provided by a common European issuer (the European Stability Mechanism) and explains how the plan could be made economically and politically satisfactory to all member states while facilitating progress on the deposit insurance and sovereign exposure issues.

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  • Paolo Savona, 2019. "A Proposal to Create a European Safe Asset," Economics Policy Note Archive 19-1, Levy Economics Institute.
    • Handle: RePEc:lev:levypn:19-1
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    References listed on IDEAS

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    1. Jeromin Zettelmeyer & Álvaro Leandro, 2018. "Europe's Search for a Safe Asset," Policy Briefs PB18-20, Peterson Institute for International Economics.
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