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Eurobonds Alone Can't Fix Europe's Debt Crisis

Wednesday, May 30, 2012

As if the economic situation in Europe had not been bad enough of late, an even scarier picture has developed over the past few weeks. Greece is mired in political chaos and seems to be hurtling toward a euro exit. Meanwhile, new questions are emerging about the solvency of some major Spanish banks, and it now appears that much of the eurozone is experiencing what is being called a “slow-motion bank run.” Coupled with the fact that nearly 20 European Union summits have yet to find a solution to the 2-year-old crisis, it is no surprise that uncertainty about the common currency’s future is higher than ever.

All the bad news is reviving interest in what some policymakers believe is the zone’s nuclear option: the eurobond, or sovereign debt that is collectively backed by eurozone governments. But can issuing common debt really solve the crisis and save the euro? ...

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