Europe’s Futile Search for Cheaper Money

BRUSSELS – Various forms of common “European bonds”, more precisely eurobonds, have been proposed recently as a way out of the current euro crisis, with proponents stressing the promise of lower borrowing costs. But this seems mostly to be wishful thinking.

To see why, one needs only to reflect on the longer-term benefits that one might expect from such bonds. Would European bonds carry lower interest rates than the average rates for national bonds?