TY  - GEN
AB  - This paper reviews the economic and historical literature on debt mutualization in Europe with reference to pre-1914 guaranteed bonds and current Eurobonds debate. We emphasize that, notwithstanding the differences in scale and nature, debt mutualization solutions similar to Eurobonds were tried before, and the closest historical examples to the present debate are the pre-1914 guaranteed bonds. We highlight three key characteristics of debt mutualization, which are apparent both in the current debate and in history: moral hazard, debt dilution and conditionality. We show that the fears about short-run dilution and moral hazard were not unknown to pre-1914 market participants. These problems were partly addressed by mechanisms of conditionality such as international financial control. The historical evidence suggests that the dilution of outstanding obligations may be overplayed in the current debate. On the contrary, creditors' moral hazard (ignored in current debt mutualization proposals) was as problematic as the usual debtor's moral hazard –especially when the groups of countries guaranteeing the bonds and the creditor nations did not overlap entirely.
AU  - Esteves, Rui Pedro
AU  - Tunçer, Ali Coşkun
DA  - 2016
DO  - 10.1515/rle-2016-0047
DO  - doi
ID  - 296095
L1  - https://repository.graduateinstitute.ch/record/296095/files/Esteves_Tuncer_Eurobonds_Past_and_Present.pdf
L2  - https://repository.graduateinstitute.ch/record/296095/files/Esteves_Tuncer_Eurobonds_Past_and_Present.pdf
L4  - https://repository.graduateinstitute.ch/record/296095/files/Esteves_Tuncer_Eurobonds_Past_and_Present.pdf
LK  - https://repository.graduateinstitute.ch/record/296095/files/Esteves_Tuncer_Eurobonds_Past_and_Present.pdf
N2  - This paper reviews the economic and historical literature on debt mutualization in Europe with reference to pre-1914 guaranteed bonds and current Eurobonds debate. We emphasize that, notwithstanding the differences in scale and nature, debt mutualization solutions similar to Eurobonds were tried before, and the closest historical examples to the present debate are the pre-1914 guaranteed bonds. We highlight three key characteristics of debt mutualization, which are apparent both in the current debate and in history: moral hazard, debt dilution and conditionality. We show that the fears about short-run dilution and moral hazard were not unknown to pre-1914 market participants. These problems were partly addressed by mechanisms of conditionality such as international financial control. The historical evidence suggests that the dilution of outstanding obligations may be overplayed in the current debate. On the contrary, creditors' moral hazard (ignored in current debt mutualization proposals) was as problematic as the usual debtor's moral hazard –especially when the groups of countries guaranteeing the bonds and the creditor nations did not overlap entirely.
PY  - 2016
T1  - Eurobonds past and presenta comparative review on debt mutualization in Europe
TI  - Eurobonds past and presenta comparative review on debt mutualization in Europe
UR  - https://repository.graduateinstitute.ch/record/296095/files/Esteves_Tuncer_Eurobonds_Past_and_Present.pdf
Y1  - 2016
ER  -