Perpetual bonds are not the best way to finance the European Recovery Fund

EsadeEcPol Insight #13

Authorised voices propose to finance the European Recovery Fund using joint perpetual debt. In this policy insight, we argue the benefits of using borrowing and lending capacities as two separate instruments of EU policy. From a financial point of view, financing the Recovery Fund by issuing debt with shorter maturities and transferring these low interest rates to Member States through loans with a narrow margin and very long maturities could be cheaper. Supporting the recovery through this transformation of maturities would strengthen debt sustainability across the EU.