Perpetual Bonds Could Save the European Union
By issuing perpetual bonds – or "Consols," as they have been called historically – the EU can address both the pandemic and climate change. Such bonds represent a credible alternative to raising the EU budget and would provide relief funds that could be targeted at member states hardest hit by the public-health crisis.
By embracing perpetual bonds – or Consols, as they are known in the United Kingdom and the United States – George Soros believes the EU can address the dual crises of COVID-19 and climate change currently threatening the world. In this Q & A, he argues that Consols present a preferable alternative to raising the EU budget. The European Commission should accept them as an interesting idea that deserves further consideration.
PROJECT SYNDICATE: Will the negative impact of the coronavirus on the eurozone economy be long-lasting?
GEORGE SOROS: Longer than most people think. One of the problems is that the virus itself is rapidly evolving and changing the way it attacks human organs. This will make it much harder to develop a reliable vaccine.
PS: Some people have proposed that the EU issue so-called coronabonds. You have promoted the idea of perpetual bonds. Why are perpetual bonds better and what risks do they entail?
SOROS: The European public and their political leaders are not familiar with perpetual bonds or Consols, as I now like to call them, but Consols are well-known in the UK and the US. They have a long history in both countries. In the UK they were used, among other things, to finance the wars against Napoleon and the First World War. In the US, they were introduced in the 1870s.