European debt settlement pact

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The European Debt Redemption Pact (also known as the European Debt Redemption Fund) is the name of an economic and financial policy proposal for the future stability order in the European Union . It was drawn up in 2011 during the euro crisis by the council of experts to assess macroeconomic development .

The concept provides for the debt of the euro countries with a debt rate of more than 60 percent of the annual economic output ( GDP ) to be reduced over a period of 20 to 25 years on the basis of joint liability. This is intended to represent an alternative to the introduction of EU bonds , which has also been discussed .

How the repayment pact works

All countries in the euro zone can participate in the repayment pact, but at least those countries which have a debt ratio that exceeds 60% of gross domestic product on a date to be determined . These would currently be Germany , France , Italy , Spain , Ireland , the Netherlands , Belgium , Austria , Cyprus and Malta . Countries that make use of the European Stability Mechanism (ESM), such as Greece, would be excluded .

All government debts that exceed the 60% limit are to be outsourced to a debt repayment fund with joint liability. The debt settlement fund would issue joint bonds, the proceeds of which are used to refinance the participating countries. The states would be jointly liable for these papers. This would result in an interest rate advantage for the crisis countries, states like Germany would currently have to pay higher interest rates. At the same time, states undertake to repay their outsourced debts within 20 to 25 years. To this end, they are obliged to deposit securities, implement binding consolidation and structural reform plans, introduce national debt brakes in the constitutions and repay part of their debt annually. Exceeding 60 percent of GDP (total debt) or 0.5% (budget deficit) again should not be permitted.

In contrast to EU bonds, the debt taken on by the debt repayment fund is limited in terms of time and volume. With the mandatory repayment of debts, the fund would abolish itself after a while. Since the volume is limited, it can only decrease once the proposal has been implemented.

Financial magnitude

Measured against the figures from 2011, the joint fund could reach a total of around 2.3 trillion euros, according to the Advisory Council. Italy would have the largest share of almost one trillion euros (41 percent), Germany's share would be 600 billion euros (25 percent).

Viewpoints

In Germany, the SPD and Bündnis 90 / Die Grünen are in favor of a debt repayment fund, while the CDU , CSU and FDP reject it.

Chancellor Angela Merkel rejected this proposal for the federal government in 2011.

literature

Individual evidence

  1. ↑ Expert Council: The European Debt Redemption Pact , pp. 3–4
  2. ^ Council of Experts: The European Debt Redemption Pact , p. 8
  3. ↑ Wirtschaftswoche : The fronts of the fiscal pact have hardened. How the debt settlement fund works , dated May 25, 2012
  4. ^ Frankfurter Allgemeine Zeitung : Debt Redemption Pact : The Plan , from November 9, 2011
  5. ↑ Wirtschaftswoche: Manuel Barroso turns from partner to opponent , from June 20, 2012
  6. ^ Die Zeit : SPD wants European debt repayment fund , from January 30, 2012
  7. ↑ Focus online : Joint liability of the euro states Kauder excludes debt repayment fund , from June 21, 2012
  8. ↑ Süddeutsche Zeitung : European Debt Redemption Pact This is how the crisis can finally be defeated , from June 26, 2012
  9. ^ FAZ: Debt Redemption Pact : the Plan , from November 9, 2011