COMMON RISK FACTORS IN THE RETURNS ON STOCKS AND BONDS

With several (not joint) guarantees enhanced by seniority and collateral, each guaranteeing Member State would again remain liable for its own share of Stability Bond issuance. However, to ensure that Stability Bonds would always be repaid, even in case of default, a number of credit enhancements could be considered by the Member States. First, senior status could be applied to Stability Bond issuance. Second, Stability Bonds could be partially collateralised (e.g. using cash, gold, shares of public companies etc.). Third, specific revenue streams could be earmarked to cover debt servicing costs related to Stability Bonds. The result...