IW Director proposes Eurobonds to strengthen Euro's global status

Michael Hüther, Director of the German Institute for Economic Research (IW), has proposed the introduction of Eurobonds to establish the Euro as a global reserve currency. Hüther suggests that a larger Euro bond market could lower financing costs for the entire monetary union and provide geopolitical advantages. He envisions a long-term process of 10 to 15 years to create a European ‘safe asset,’ potentially through a European investment union focused on specific projects such as cross-border infrastructure, energy, digitalization, and defense, rather than merging all national debts.

The proposal has met significant criticism from economists. Hans-Werner Sinn, former president of the Ifo Institute, argues that joint liability for debt is counterproductive and could lead to excessive indebtedness. Sinn warned that debt burdens could “crash down on us like a waterfall” and cautioned against repeating certain aspects of American monetary history. Additionally, Friedrich Heinemann of the ZEW research center stated that Europe requires a focus on growth, innovation, and bureaucracy reduction rather than common European debt to advance the Euro's global standing.