Shared scepticism, different motives: Franco-German perceptions of a common European safe asset

A common European safe asset is a highly contentious proposal within the Euro area reform agenda. Various safe asset proposals have been put forward since the onset of the Euro crisis ranging from Eurobonds to European Safe Bonds (ESBies), also known as Sovereign Bond-Backed Securities (SBBS), which currently enjoy the institutional support of the European Commission as well as the High-Level Task Force on Safe Assets at the European Systemic Risk Board. Its proponents argue that a European safe asset is required to break the bank-sovereign nexus and limit destabilising capital flows, ultimately improving financial stability in the Euro area. Nevertheless, the concept of a European safe asset remains controversial among national policymakers; some consider the idea promising, while others see it as a threat to market discipline, national sovereignty, or long-term fiscal stability.