Serban V.C. Enache — Bulgaria and the Euro — How Mosler Bonds could help

MMT-based analysis and policy advice. Short.

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Bulgaria and the Euro — How Mosler Bonds could help.
Serban V.C. Enache

Warren Mosler Proposes ‘Mosler Bonds’ To GVI As First Step To End Territory’s Financial Crisis

“I have made the proposal to the USVI government that Mosler bonds be issued and sold as a necessary first step to end our financial crisis,” Mr. Mosler said. 

The candidate described the bonds as being identical to the territory’s current tax-free municipal bonds, with one exception: With Mosler bonds, the standard default clause in the bond indenture that begins with “In the event of default”, is replaced with, “In the event of nonpayment this bond becomes a USVI tax credit that is freely transferable and continues to accrue interest, and can be used for payment of any and all taxes due to the USVI.”...

Virgin Island Consortium
Warren Mosler Proposes ‘Mosler Bonds’ To GVI As First Step To End Territory’s Financial Crisis

Philip Pilkington and Warren Mosler co-author policy note on tax-backed bonds for the EZ

Levy Economic Institute of Bard College

POLICY NOTE 2012/4 | March 2012

Tax-backed Bonds—A National Solution to the European Debt Crisis

The root of Europe’s sovereign debt crisis can be found in the fact that investors are concerned that countries in the periphery might default, causing them to demand a higher yield on government bonds. What’s needed is a way of giving peripheral debt a high degree of safety while allowing peripheral countries to remain users of the euro.

A simple solution to this problem would be for peripheral countries to begin issuing a new type of government debt: the “tax-backed bond.” Tax-backed bonds would be similar to current government bonds except that they would contain a clause stating that if the country failed to make its payments when due—and only if this happens—the bonds would be acceptable to make tax payments within the country in question. This tax backing would set an absolute floor below which the value of the asset could not fall, assuring investors that the bond is always “money good,” leading to lower bond rates and thus ensuring that peripheral countries would not be driven to default.

Download:
Policy Note 2012/4
Associated Program:
The State of the US and World Economies

Author(s):
Philip Pilkington  Warren Mosler

Solutions to the Euro Crisis from MEPOC

Well, like all economists always do, let’s assume!

Let’s assume that Europeans have two goals:

1) Preventing sovereign debt defaults to avert a full-blown banking crisis; and

2) Saving the political project of the single currency that Europeans regard as a fundamental pillar of the integration process that started right after World War II.

Question: Should Europeans work towards reaching goal #2 in order to secure goal #1, or can they achieve goal #1 and then work towards goal #2?

Read the rest at Solutions to the euro crisis by Andrea Terzi of MEPOC (Mosler Economic Policy Center at Franklin College, Switzerland)

Hint: He like Mosler Bonds.