From 600+ conversations with the world’s leading thinkers.
I think the 2008-2011 era has demonstrated that there are major problems with the structure and governance of the EMU and there is need for considerable change, probably more fiscal and political union, of which a common Euro denominated bond will be part of.
The miracle of capitalism is that if you have a central government trying to solve something, it will come up with one averagely optimal solution for everybody. And capitalism will come up with 10 different solutions to the same problem.
Traditional index bond management gives higher index weightings to the most indebted countries, regardless of their capacity to service their debt. A country facing financial hardship and trapped in a debt spiral to remain solvent would see its index weight increase until the whole mechanism collapses.
Transparency is paramount. We have to make sure that we have sufficient transparency in the investments we are making, to be able to manage risk for our clients.