Hopes for European ‘safe’ bonds lean on pre-crisis techniques

Christian Odendahl, chief economist at think-tank the Centre for European Reform, said that despite the efforts to distance the plan from the concept of debt mutualisation, Germany was likely to regard it with suspicion.

“The Germans feel that this is a clever way of persuading them to sign up to something which at least has the potential to become debt mutualisation by the back door,” he said. “Particularly if there was an agency doing the structuring and sales of these products, the markets would perceive that as 100 per cent safe and expect a bailout if it goes wrong.”