Spanish Finance Minister Carlos Cuerpo has called for increased joint European Union debt issuance, arguing it would significantly reduce borrowing costs, save taxpayers billions, and help finance much-needed investment across the bloc. Speaking at the Peterson Institute for International Economics in Washington, Cuerpo highlighted the EU’s readiness, citing its strong international trade presence, robust institutions, and resilient market infrastructure as key ingredients for a safe asset.
Cuerpo proposed that the European Commission, which could issue debt on behalf of EU member states, could manage a specific share of yearly redemptions and allowed deficits. He estimated that focusing on these elements could lead to a €5 trillion euro-denominated market issued by the Commission within five years. This scale of joint issuance, he asserted, would imply annual savings of €25 billion. These savings would stem from the Commission’s AAA credit rating, enabling cheaper borrowing compared to individual member states.
The proposal comes despite strong opposition from Germany and other northern European countries, which have historically been reluctant to share responsibility for the debts of others. Cuerpo addressed this concern, stating that the Spanish plan includes a compensation mechanism for AAA-rated EU countries such as Germany, Denmark, Luxembourg, Netherlands, and Sweden, which already benefit from equally cheap or cheaper borrowing rates. He noted that current joint debt issuance by the Commission stands at €750 billion, far less than the US$40 trillion in U.S. Treasury issuance, but envisioned the €5 trillion EU safe asset as a crucial initial step and a necessary anchor for the European economy.
