Eurogroup agrees to study Spanish proposal for a European safe asset despite firm rejection from the Netherlands and Finland

Spain's proposal

Spain returned to a long-standing debate on Thursday, urging the Eurogroup to create a permanent mechanism for joint debt issuance. Vice-President Carlos Cuerpo argued that centralising part of the bloc's borrowing would produce a European safe asset comparable to US Treasuries, reinforce the euro's international role, and generate significant savings for member states. The plan envisages issuing up to €850 billion in common debt annually, with the aim of lifting the stock of joint issuance from the current €750 billion to more than €5 trillion within five years.

The increase in joint issuance that our proposal entails will allow annual savings of around €25 billion for the Union as a whole. It is efficiency that generates savings for the European taxpayer.

Frugal opposition

Even before the meeting began, the Netherlands and Finland delivered blunt rejections. Dutch Finance Minister Eelco Heinen called it an old discussion and said his answer "is always the same: no." Finnish minister Riikka Purra was equally categorical.

No to common debt. No to a new common debt at EU level. It is not a solution and it is not an option for Finland.

Germany has traditionally opposed such schemes, though its minister did not speak publicly ahead of the session. Ireland's Simon Harris said he was open to discussing the document but stressed that Dublin's priority was reaching a deal on the Multiannual Financial Framework.

The debate continues

Eurogroup President Kyriakos Pierrakakis acknowledged the deep divisions but insisted the discussion was worth having. He confirmed that deputy permanent representatives would examine the proposal in the coming months before ministers return to it.

A common safe asset is a matter on which we have historically had disagreements in this room. That said, it is a debate worth having.

European Commissioner Valdis Dombrovskis noted that the debate was not new but remained pertinent given the negotiations on the next EU budget and the development of the Savings and Investment Union. He added that the Commission's proposal for the next financial framework already included programmes that could rely on new debt issuance to finance loans to member states and partner countries.

Scale and savings

Cuerpo framed the initiative as a voluntary mechanism that would not increase overall debt but would lower financing costs by reducing the fragmentation of 27 separate debt markets. He said investors had recently signalled they were looking for a safe European asset and wanted more joint issuance.

The Spanish government believes that once a critical mass of states joins and the advantages become visible, more countries will opt in. The proposal will now move to technical level among national treasury directors before any political decision is taken.