The ban on joint borrowing was part of the founding act of the European Union. This was intended to prevent free-rider behavior, which would have allowed the fiscally lax states to surf the wave of the high creditworthiness of well-managed partner countries and thus gain interest rate advantages. Above all, it was the German Bundesbank that warned against bringing the capital market to a common interest rate denominator and thus leveraging out the considerable fiscal and productivity differences between the various regions and contributing to a considerable misallocation of resources.

Most recently, in the wake of the Russian crisis, we heard about the introduction of war bonds in the name of the EU, which could serve as a bridgehead for the introduction of Eurobonds. Today, the head of the German Bundesbank, Joachim Nagel, warned against this very introduction. Could it be that the Bundesbank still retains a shred of regulatory sanity or do they see a crisis looming in the Eurosystem that the Bundesbank, which has already been drawn into massive obligations via the Target 2 system, could no longer shoulder?

The SURE bonds introduced during the lockdowns are already the failed blueprint for joint borrowing. An illiquid eurobond that sees a price below par once a week - only the ECB remains as a stockpile.