New statistics have revealed that 55% of CFA Institute members in the European Union and Switzerland think that the introduction of stability bonds among euro area member states would alleviate the sovereign debt crisis.

According to a CFA Institute poll of 798 members, 52% said that stability bonds would also reinforce financial stability in the euro area and 56% said their introduction would facilitate the transmission of euro area monetary policy.

At the end of November last year the European Commission published a green paper on whether they could utilise this financial instrument as a way of offering healthy liquid investment opportunities for investors.

However, it was noted that a risk of moral hazard still remains at the forefront of many professional investors’ minds with 86% stating that member states should consider improvements in economic, financial, and political integration. In order to improve the eurozone situation, 88% said that there should be an increase in surveillance in the design and implementation of national fiscal policies.

CFA director of capital markets policy Agnès Le Thiec said: “New financial instruments will not cure the structural problems of imbalances in trade and competitiveness, or public debt, in many member states.

“Stability bonds also carry a risk of moral hazard, and would therefore have to be associated with much more extensive structural reforms, fiscal integration and a strong common governance network.”

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