Rehn: European safe asset now strategic necessity
Olli Rehn, Governor of the Bank of Finland, argued that a European safe asset is no longer a pragmatic response to crises but a strategic necessity. He emphasized this need due to geopolitical shifts, investment requirements, and strengthening the euro's global role.
Geopolitics demands a common anchor
Olli Rehn, Governor of the Bank of Finland, emphasized the strategic necessity of a European safe asset, driven by a world increasingly shaped by geopolitical power and financial market uncertainty.
He outlined three key reasons: First, substantial investments in European public goods, such as common defence and the green transition, require stable, efficient, and scalable financing.
Common European instruments can help catalyse private investment, especially as many EU Member States face high indebtedness.
Second, a European safe asset would reinforce the international role of the euro.
A global currency needs deep, liquid financial markets with a reliable benchmark, a privilege currently held by the US dollar.
Geopolitical shifts offer an opportunity for the euro if Europe strengthens its financial architecture.
Third, resilient "market plumbing" – a robust financial infrastructure – is vital for stability during shocks.
A safe asset serves as a pricing benchmark and collateral backbone, supporting financial stability and monetary policy transmission.
The ECB's enhanced Eurosystem repo facility (EUREP 2.0) will provide broader euro liquidity access to foreign central banks from Q3 2026.
From crisis pragmatism to decisive action
Rehn observed that European integration often advanced through pragmatic, crisis-driven responses, exemplified by the evolution of the European Stability Mechanism (ESM) from temporary solutions.
However, he asserted that this "muddling through" approach is no longer viable, as global dynamics necessitate decisive European action.
The common safe asset debate has persisted for two decades, exploring options from synthetic structures like ESBies to common EU issuance.
While recent crises have led to significant supranational issuance, such as NextGenEU, a truly deep and liquid benchmark asset is still developing.
The policy discussion has decisively moved from "whether" to "how.
" The workshop, structured around the rationale, design choices, and market needs, aims to tackle this "how" with financial stability at its core.
Rehn urged for serious European thinking and robust solutions, emphasizing the need for sustainable design and credible delivery.
Overdue, but the time is now
Rehn's speech underscores a critical shift in the safe asset debate, moving beyond theoretical discussions to an urgent call for action.
While the concept has been debated for decades, current geopolitical and economic realities leave no room for further delay.
Europe must now translate analytical sustainability into credible delivery to secure its financial future.