Former economist Ulrike Malmendier says the EU should start planning for Eurobonds if it ever needs to raise a large amount of money quickly for defence. She warned that the security situation in Europe could deteriorate, creating sudden, massive funding needs that would be hard to meet without a shared bond framework. “If that happens, we should already have the design ready” she told the “Rheinische Post” on Wednesday.
Malmendier acknowledges the risks that critics point out-the fear that Eurobonds could threaten German and European financial stability-and that their concerns are justified. To balance that, she proposes a two‑tier structure: “Blue Bonds” which could cover up to 25 % of a country’s GDP under joint liability and be issued at low interest rates, and “Red Bonds” which would be beyond that threshold, carried under national liability and issued at higher rates, depending on the country.
She is a researcher at the University of California, Berkeley, and served on the Expert Council for the Economy until the end of February.