BRUSSELS, Nov 13 (Reuters) - Government bonds provide the euro zone with safe assets and there is a need to be cautious regarding the debate for a common euro zone safe asset, an official at Ireland’s debt management agency said on Wednesday.
Plans for common bond issuance by the euro zone countries have repeatedly failed in recent years. Countries with top-rated securities such as Germany fear such a move would increase their debt-servicing costs and favour less thrifty countries.
But in recent months the debate has been revived and the head of the Eurogroup of euro zone finance ministers, Mario Centeno, in July set up a working group to overcome the stalemate by the end of the year.
In a panel discussion on safe assets at the Association for Financial Markets in Europe’s government bond conference in Brussels, Anthony Linehan, deputy director for funding and debt management at Ireland’s National Treasury Management Agency, urged caution.
“We do have safe assets in Europe and that is the government bond markets,” Linehan said during a panel debate.
“It’s fine to have this debate..If you have a safe asset you have to ask will it perform as a safe asset?”
He added: “We’re naturally cautious on the need for a safe asset.”
Reporting by Dhara Ranasinghe; editing by Yoruk Bahceli