Chaos is prevailing in Europe following French President Emmanuel Macron’s proposal for the issuance of Eurobonds. Just hours before the informal EU Summit this Thursday (12/2/2026), a "civil war" has broken out in Germany as—in a historic shift—the country’s central bank has come out in favor of issuing common debt. This comes just one day after the Chancellery rejected the French proposal, signaling that Europe has a productivity problem that cannot be solved with more debt.
The Bundesbank's 180-degree turn
Specifically, the head of the German central bank (Bundesbank) has called on the EU to issue more common debt, placing him at odds with Chancellor Friedrich Merz, who wants to restrict such issuance only to emergency cases.
"Making Europe attractive also means attracting investors from abroad," Bundesbank President Joachim Nagel told Politico ahead of the informal EU summit. "A more liquid European market in terms of safe European assets would support this." Eurozone central bankers—who for the first time are united in supporting common debt—have sent EU leaders a wishlist of reforms to ensure the European economy can adapt and remain competitive against the US and China.
Clashing with Merz
However, Nagel’s departure from traditional German opposition to shared debt comes at a difficult time for Berlin. Earlier this week, the German government rebuked the call from French President Emmanuel Macron to issue more Eurobonds to bolster strategic sectors such as artificial intelligence, European defense, semiconductors, and robotics. Macron suggested the EU could also exploit the unpredictable foreign policy of US President Donald Trump to attract global investors.
"The global market is increasingly afraid of the US dollar. It is looking for alternatives. Let us offer it European debt," Macron told journalists on Monday. Common debt, known in the markets as Eurobonds, has long been a divisive issue. Since the sovereign debt crisis, Southern European governments have pushed for them to distribute the national debt burden more evenly, while frugal northern states warn this could undermine fiscal discipline.
Changing times
The Bundesbank has traditionally led the camp of skeptics in Northern and Central Europe who believe Eurobonds are suitable only for isolated crises requiring drastic action. These include the €800 billion post-pandemic recovery plan and a €90 billion loan to Ukraine for defense against Russia. The "frugal bloc" fears the EU will make a habit of raising debt to solve all its problems. But times are changing fast.
"Tradition is something that reflects the reality of the past," Nagel said when asked about the Bundesbank's shift, emphasizing that Europe's security has not been so threatened since World War II. "Now we have a different reality."
Macron’s proposal...
In an interview published Tuesday (10/2/2026), the French president urged Europe to launch a plan for new common borrowing to boost investment. Emmanuel Macron presented the plan as an economic necessity if the continent wishes to keep pace with the US and China. Berlin strongly rejected the plan just hours after the interview was published, marking the latest in a series of conflicts between Macron and Friedrich Merz on issues ranging from trade to managing relations with Donald Trump.
...and the "No" from the German Chancellery
The rejection from Berlin highlights the growing friction between the two leaders. "We believe that, in view of the summit agenda, this is somewhat of a distraction from the real issue, which is that we have a productivity problem," stated a senior German government official close to the Chancellor.
"It is true that we need more investment," the official said. "But to be honest, this belongs within the framework of the Multiannual Financial Framework," he added, referring to the EU budget for 2028-2034, which is currently under negotiation.
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