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Europe’s best bet for financial sovereignty is a true safe asset - Carlos Cuerpo - Financial Times

Global portfolios are diversifying rapidly, looking for high-quality, liquid safe assets. With its robust institutions and unwavering respect for the rule of law, Europe is a premier destination for long-term capital. Yet European markets remain small and fragmented. EU-issued bonds total about €1tn compared to nearly €30tn in outstanding US Treasuries, meaning they are unable to absorb global demand even when combined with the total of triple A and double A-rated sovereign bonds in the euro area. 

Since 2025, the euro has appreciated 15 per cent against the US dollar. We are getting a stronger currency without the strategic dividends it should deliver: cheaper financing, deeper liquidity and greater financial stability. Capital is flowing towards Europe, but without a safe asset at scale it has nowhere to anchor. We need to correct this problem, which would make the reform agendas set out by Enrico Letta and Mario Draghi financially feasible.

Europe’s best bet for financial sovereignty is a true safe asset

 

 

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