Doesn't that undermine the purpose of the exercise? The market could still extort ridiculous returns for holding bonds.

The market would not exert the same sort of pressure on Euro-bonds, it is completely different to bid for a bond issued by a state with a GDP of 250 000 million € and a budget deficit of 12% from a bond issued by an union with a GDP of 8.4 billion €, a deficit of 6% and a trade surplus. The expectations are totally different and the demand for Euro-bonds should be rife.

The easiest way to muddle through the crisis would be to order the ECB to enforce a maximal level of interest on Eurozone debt.

That would also be the easiest way for a sovereign default within the Eurozone :) with an interest cap troubled states wouldn't find buyers for their bonds to roll-over debt and/or refinance their budgets. And remember that when a state emits debt the ECB does not intervene.

luis_de_sousa@mastodon.social