In a keynote speech, European Systemic Risk Board First Vice-Chair Olli Rehn called for further examination of a European safe and liquid asset as part of efforts to complete the Savings and Investments Union. He argued that a well-designed asset could deepen capital markets, provide a common pricing benchmark and stable collateral, weaken links between banks and sovereigns during stress, and help channel European savings toward investment in defence, energy and productivity. The remarks develop the ESRB’s earlier discussion of a safe asset as a potential means of supporting Europe’s financing needs. Rehn said any design must preserve fiscal discipline, distribute costs and benefits fairly among member states, and avoid creating risks for national bond markets. Existing proposals, including common EU issuance, pooled national debt and structures separating safer from riskier claims, do not yet meet all three tests. Market acceptance would also depend on credible backing, liquidity and inclusion in major bond indices. The ESRB could support policymakers by assessing the financial stability implications and trade-offs without determining political choices on fiscal integration or risk sharing. That analysis would need to account for wider vulnerabilities, including concentrated and increasingly debt-financed exposure to artificial intelligence investment, possible corrections in AI-related valuations, rising public debt, cyber threats and geopolitical pressures.
European Systemic Risk Board First Vice-Chair calls for further examination of a European safe asset
European Systemic Risk Board First Vice-Chair Olli Rehn called for further examination of a European safe and liquid asset to support deeper capital markets and productive investment. Any design must preserve fiscal discipline, share costs and benefits fairly, and avoid destabilizing national bond markets. He said the ESRB could assess the financial stability trade-offs while leaving decisions on fiscal integration and risk sharing to policymakers.