Hungarian FM proposes sovereign debt pooling

In a piece for the 'European Voice', Hungarian Foreign Minister János Martonyi voiced his opinion that governments must force the markets to change their perceptions of the eurozone and bear more common responsibility.

"To re-align perceptions, the eurozone needs to unleash a game-changing response. What we need now is a pooling of eurozone sovereign debt in order to stabilise the eurozone by virtue of sheer size and liquidity. This could stem panic and turn attention back to the eurozone's strong economic fundamentals, to the steady improvement in improving balances and to long-term re-building", János Martonyi pointed out.

He added that "understandably, some fear their support could be abused. That, though, misses an important point: the reconstruction of our system is economic governance is well under way. And if we believe that treaty change would promote economic and political cohesion, we should act immediately."

As far as Hungary is concerned, the Foreign Minister was of the view that "in the war of perceptions, facts matter little. If policy responses are perceived to be inadequate, expectations turn negative, investors flee and downgrades ensue. When that happened in mid-November to Hungary,"

In this situation, Hungary "immediately sought the co-operation of the International Monetary Fund (IMF) and the EU – a move that surprised many but that will eventually, I hope, break the vicious circle of negative perceptions about Hungary in a way that our continuously improving deficit and debt figures have been unable to".