On 11–12 September 2025, the 2nd CEPR-SAFE Frankfurt Hub Conference of Research Policy Networks (RPNs) took place at the House of Finance. Triggered by growing debt levels in the European Union and global economic turbulence emanating from changes in US economic policy, the debate about the stability of the European financial market has reignited. A keynote and a policy panel debated whether European safe assets in form of Eurobonds can emerge as an alternative to US Treasuries. Experts from academia, financial industry and policy makers also debated over new policy challenges deriving from the increase in importance of non-bank financial intermediaries, stablecoins, and other policy-relevant research topics.
Blue bonds: A safe asset for Europe?
The keynote address on 11 September was delivered by former International Monetary Fund chief economist Olivier Blanchard, MIT Senior Fellow, Peterson Institute for International Economics and CEPR. Blanchard argued that replacing a proportion of national bonds with jointly issued Eurobonds could provide Europe with an arguably much needed “risk-free” asset and establish the currently fragmented and small European bond market as a legitimate option. The so-called “blue” Eurobonds of the proposal are senior claims with respect to national sovereign bonds. According to Blanchard, the wariness of investors towards the dollar creates a window of opportunity for a deep and liquid Eurobond market and for a more prominent international role of the euro without requiring full fiscal risk sharing.
Richard Portes, London Business School and Founder and Honorary President CEPR, cautioned in the following panel that “there is no such thing as a safe asset.” In view of the vulnerabilities even in US Treasuries, he stressed that safety is always relative. Tammo Diemer, German Finance Agency, was skeptical of financially engineered solutions such as European blue bonds gaining the trust of market participants. He warned that lacking direct fiscal backing, blue bonds risk becoming a playball for political fights, rather than genuine safe havens - the latter role being currently filled by German government debt. He challenged the debate by asking for evidence of demand for a larger size for a Euro safe asset. The panel on European Safe Assets was opened and moderated by Giancarlo Corsetti, European University Institute and CEPR.
Urgency meets design challenges
Others stressed the urgency of progress. “We need a safe asset. What we have now is not enough, the proof for that is that we have a bund futures market that has a volume of about 150 billion per day and a bund cash market of 30 billion. In the US instead the US bond cash market has a volume that is far larger than the volume of the future market” argued Loriana Pelizzon, Deputy Scientific Director SAFE and CEPR RPN Leader European Financial Architecture. She noted that previous steps towards joint issuance had only come in moments of stress – such as the NextGenerationEU bonds launched in 2020 in response to COVID and wondered whether Europe might only move forward under the pressure of a new crisis. While Jan Krahnen, SAFE and CEPR RPN Leader European Financial Architecture, agreed that “the earlier we get a safe asset, the better,” he was skeptical of the “blue” euro bond proposal and emphasized the need for careful design to limit incentives for over-indebtedness for individual countries: “Different countries need to be able to individually default, without catching everyone else with them”.
The lively discussion highlighted both the promises and the difficulties of creating a European safe asset. While some saw the German bond market as a de facto benchmark, others pointed to its limited market size compared to Europe’s needs. The panelists agreed that a credible joint instrument could bolster the euro’s standing as a global reserve currency yet diverged on whether current initiatives offered a realistic path forward.
Shaping finance in times of change
Over two days, researchers, policy makers, and industry experts discussed the changes shaping financial systems amid digital innovation and geopolitical uncertainty. The conference was hosted by the CEPR Research Policy Networks European Economic Policy, FinTech and Digital Currencies, and European Financial Architecture, jointly with the Leibniz Institute for Financial Research SAFE. In closing the conference, co-organizer Loriana Pelizzon thanked the participants for the valuable forum for exchange and collaboration and expressed her anticipation for next year’s edition.
