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Spain Is Leading the Way on Perpetual Bonds

When the European Council’s virtual summit convenes on April 23 to address how the European Union should cope with the economic fallout of the COVID-19 pandemic, it should consider the Spanish government's submission carefully. Indeed, it should be the first item on the meeting’s agenda.

NEW YORK – The European Council is holding a virtual summit on April 23 to consider how the European Union should cope with the economic fallout of the COVID-19 pandemic. Spain’s submission is by far the most thoroughly considered and innovative proposal that will be presented. It should be the first item on the meeting agenda.

The main innovation that Spain will introduce is the EU’s issuance of perpetual bonds. The idea is not new. Britain first issued consolidated bonds, or Consols, in 1752, and later used them to finance the Napoleonic and Crimean Wars, the Slavery Abolition Act, the Irish Distress Loan, and World War I. The United States Congress authorized issuing Consols in 1870 to consolidate the debts accumulated in the Civil War.

But perpetual bonds have never before been considered by the EU. Now Spain is proposing them as an extraordinary measure to deal with an extraordinary situation. They would be extremely effective.

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