The Name is Bond

8/12/2019 The Name is Bond

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The Name is Bond.Euro Bond


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What is Euro Bond?

Tool intended to collectivize debt across all Eurozone countries

Determining Value:

The value of these bonds is based on each countrys fiscal and economic health.


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Servicing their Debt:

They can service their debt through:

IMF

European Central Bank

The European Commission

To prevent this spreading of crisis to Italy& Spain, its solution waEUROBOND


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If Eurobond adopted:

Debt Countries like Greece, Portugal and Ireland would be allowed to bat lower interest rates.It may also cause some countries debt repaymen

But after the crises would be solved it would increases the borrowing c

Like Germanys borrowing cost will be higher as compare to debt counwhich will increase its costing.


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Solution of Crisis:

The Solution of crisis according to Germany and European commis

Strict Fiscal and Deficit limits


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Structure of Eurobond

The discussion for Eurobond structure categorized into three catego

Door 1:

All Eurozone countries should completely mutualize their current st

debt and issue common bonds. (each member state not only pays fobut also the obligations of another country like Greece.


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Door 2:

Create a mix of Eurobonds and national bonds.

The greater the proportion of Eurobonds the less market pressure afaces.

In this the most commonly discussed proposal is 60/40 (Eurobond/bond)

But no one has clue how to manage this scenario


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Door 3:

It is also called the European Debt Redemption fund.

This will involve joint guarantees by the 17 Eurozone countries for anational debt exceeding the 60% debt-to-GDP ratio.

European Commission would take responsibility for a set period of Eurobond would be an instrument with mandate broad enough to h

crisis.


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Project Bonds:

This idea came in the discussion of Eurobond, which is project bondfinancial instruments which are backed by EU budget, that can be usfinance the infrastructure projects relating to:

Energy

Transportation

Communication

Information networks

$293 million of EU capital has been reserved for this effort.


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Moreover, this effort can help the private sector to make an investment, likely to be until 2014.

Collectivized debt in the form of Eurobond wont reduced the overall le

European sovereign debt, but will help to solve Europes structural prob

Right Trade Deficit

Improve Competitiveness

Stimulate long Term Growth

Reverse Public indebtedness

Which is what these countries like to do


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The Decision

The decision is that if it will introduce than it would be a greater sighrelief in Washington, Beijing and other world capitals.

But the decision depend on the stronger economy of that area whichGermany.

The question arises that, is Germany is willing to transfer its wealth tincrease its borrowing costs and increase inflation to save indebted Enations.

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The Name is Bond