Carlos Cuervo
Amid growing geopolitical uncertainty, the search for safe-haven assets is becoming a top priority. At the same time, the EU is stepping up its efforts to give the euro a more prominent international role as a global reserve currency.
A“window ofopportunity”has opened
“We believe that a ‘window of opportunity’ has now opened to put forward this proposal. In recent months, we’ve been discussing the euro’s international role, and many compelling arguments have been made in favor of the need for a safe-haven asset,” Euronews quotes Cuervo as saying. “We’ve decided that now is the time for a concrete proposal.”
Spain has circulated a document outlining a detailed proposal for a new EU joint borrowing mechanism called the “European Sovereign Facility.”
The annual borrowing volume could reach 850 billion euros if all 27 member states, as well as the European Stability Mechanism and the European Financial Stability Facility, participated in the mechanism.
This would allow the EU to build a €5 trillion joint debt portfolio over five years. If not all EU countries are willing to participate, Spain proposes creating a “coalition of the willing” in the first phase.
Pros and Cons of the Proposal
“For the initiative to carry weight, it must include at least the five largest issuers in the eurozone: only they could ensure an annual borrowing volume of 540–550 billion euros,” the document states.
Guarantees under this mechanism would be two-tiered: on the one hand, loans provided to participating states; on the other, the EU budget.
Currently, the bloc’s 27 member states are discussing the long-term budget for 2028–2034, which must be agreed upon by the end of 2026. There is controversy over how this budget will be financed.
Spain will have to convince countries that reject joint borrowing. A number of Northern European countries, including Germany and the Netherlands, are strongly opposed to new joint debt. In contrast, countries such as France and Greece publicly support the idea.
