The European Debt Management Agency - CEPR RPN European Economic Policy

A webinar organised by the CEPR RPN on European Economic Policy, in collaboration with the European and Monetary Union (EMU) Laboratory of the European University Institute (EUI). Presenters Carlo A. Favero (Bocconi University) Guido Lorenzoni (Chicago Booth) Organisers and Moderators: Laura Bottazzi (Bologna University and CEPR) Giancarlo Corsetti (EUI and CEPR) Abstract: The Draghi report has injected new life on the ongoing debate on reforming the macroeconomic framework of the Euro area: how can the region create sufficient fiscal space to stabilize the economy and finance growth and innovation, while ensuring debt and financial sustainability? With public debt at record-high levels in some countries, and a growing need for infrastructural investments across the EU, new fiscal rules and effective debt management strategies must be developed collectively. This webinar reconsiders the option of creating a European Debt (Management) Agency (EDA) as a policy tool addressing two key risks, roll-over risk and sustainability risk. Placing part of national debts under the management of a European Debt Agency could lower borrowing costs across the area, and enhance ECB's operations in debt markets. The webinar will discuss how the EDA would prevent markets from driving prices away from economic fundamentals, implying inefficient hikes in borrowing costs, and promote fiscal discipline among Member States, within a framework that does not rely on debt mutualization. The creation of the EDA would help mitigate the macroeconomic impact of excessive fluctuations in risk premia.