Olli Rehn’s welcome address at the ESRB workshop argues that the creation of a European safe asset has shifted from an academic debate to a strategic economic necessity.
Why this matters now
Rehn stresses that today’s geopolitical environment is unstable, with global tensions and wars increasing uncertainty in financial markets. In such conditions, investors and economies need reliable “safe havens” and financial anchors more than ever.
Three main reasons for a European safe asset
Financing Europe’s big common needs
Europe must invest heavily in shared priorities like defence and the green transition. Many EU countries are already highly indebted, so they lack fiscal space. A common safe asset could:
- provide stable funding
- attract private investment
- support EU-wide projects efficiently
Strengthening the euro’s global role
The US dollar benefits from a deep Treasury market and the “exorbitant privilege” of global demand. Rehn argues the euro could gain similar strength if Europe builds:
- deeper and more liquid capital markets
- a common benchmark safe asset
This would make the euro more attractive internationally, especially in times of global uncertainty.
Financial stability and market infrastructure (“market plumbing”)
A safe asset is not only about funding—it is also about financial system stability. It should:
- remain liquid during crises
- serve as collateral in repo and derivatives markets
- act as a benchmark for pricing risk
He compares this to defence in football: it is what ensures long-term stability when shocks hit.
Policy and institutional context
Rehn highlights recent ECB measures (such as enhanced liquidity facilities for foreign central banks) as part of strengthening Europe’s financial infrastructure.
He also explains that European integration historically advances through pragmatic crisis-driven solutions, using the example of the European Stability Mechanism (ESM), which evolved from temporary crisis tools into a permanent institution.
However, he argues this “muddling through” approach is no longer sufficient because:
- global competitors act faster
- Europe cannot afford long delays anymore
4. Current state of the debate
Europe has been discussing safe asset ideas for almost two decades, including:
- ESBies / SBBS (synthetic safe assets)
- Blue and Red bond proposals
- joint EU debt issuance (e.g. NextGenerationEU)
While progress exists, there is still no fully liquid, deep European benchmark asset.
Key conclusion
The debate has now shifted from “whether Europe needs a safe asset” to “how to design one properly.”
Rehn calls for:
- serious technical design work
- realistic financial market solutions
- decisive political action
He concludes that Europe must move beyond discussion and deliver a credible, functional European safe asset to match global economic realities.
