no euro bond market or no euro TREASURY?

[jk]

i have had a hard time understanding whenever someone points to the lack of a euro bond market as a reason the ecb can't monetize. of course there is a euro bond market- bonds denominated in euros trade all the time, private bonds and sovereign bonds issued by germany, spain, and so on.

so, theoretically, the ecb could monetize by buying these sovereign bonds. but the political issues that arise are momentous- which country's bonds should be bought and in what quantities? should the purchases be proportional to population, gdp, deficits?

spreads between sovereign bonds have increased, btw, as traders have begun to price in the fact that the various eurozone governments really do have different risk profiles, but those spreads are still not that great.

so it seems to me that, for the purpose of clarity, we would be better off saying that the problem with monetization for the ecb, should it wish to monetize [another discussion entirely], is the lack of a central, federal euro TREASURY, to offer eurozone treasury bonds not associated with any particular eurozone member.

[Spartacus]

Re: no euro bond market or no euro TREASURY?

does the nominal value of these euro denominated bonds issued by the separate governments trade as actual paper euros?

i have had a hard time understanding whenever someone points to the lack of a euro bond market as a reason the ecb can't monetize. of course there is a euro bond market- bonds denominated in euros trade all the time, private bonds and sovereign bonds issued by germany, spain, and so on.

so, theoretically, the ecb could monetize by buying these sovereign bonds. but the political issues that arise are momentous- which country's bonds should be bought and in what quantities? should the purchases be proportional to population, gdp, deficits?

spreads between sovereign bonds have increased, btw, as traders have begun to price in the fact that the various eurozone governments really do have different risk profiles, but those spreads are still not that great.

so it seems to me that, for the purpose of clarity, we would be better off saying that the problem with monetization for the ecb, should it wish to monetize [another discussion entirely], is the lack of a central, federal euro TREASURY, to offer eurozone treasury bonds not associated with any particular eurozone member.

[jk]

Re: no euro bond market or no euro TREASURY?

does the nominal value of these euro denominated bonds issued by the separate governments trade as actual paper euros?

i'm not sure i understand your question. german bunds, for example, trade regularly, and are settled in euros. same for other euro sovereign bonds, commercial bonds, etc.

[FRED]

Re: no euro bond market or no euro TREASURY?

i have had a hard time understanding whenever someone points to the lack of a euro bond market as a reason the ecb can't monetize. of course there is a euro bond market- bonds denominated in euros trade all the time, private bonds and sovereign bonds issued by germany, spain, and so on.

so, theoretically, the ecb could monetize by buying these sovereign bonds. but the political issues that arise are momentous- which country's bonds should be bought and in what quantities? should the purchases be proportional to population, gdp, deficits?

spreads between sovereign bonds have increased, btw, as traders have begun to price in the fact that the various eurozone governments really do have different risk profiles, but those spreads are still not that great.

so it seems to me that, for the purpose of clarity, we would be better off saying that the problem with monetization for the ecb, should it wish to monetize [another discussion entirely], is the lack of a central, federal euro TREASURY, to offer eurozone treasury bonds not associated with any particular eurozone member.

EJ does say that somewhere, but I can't find the reference. I did find the original article used to follow-up on the GavKal interview:

Bankers out of tune on market structure

"Benoît Coeuré, chief executive of Agence France Trésor, the French debt management office, said: “We operate in a given constitutional framework in Europe that is different from the US. The Maastricht Treaty says that member states should retain separate fiscal policies. If the treaty was different, then the bond market might be different, but the way the market is organized is a function of Maastricht and, although I would personally favor it, I have seen no indication from the population of Europe that they would want it otherwise. Until that is the case, there will be no single treasury for Europe and no unified issuance.”

Hope that helps.