New tax could prevent free riding in Eurobond implementation, study finds.
A new tax system called Clarke-Groves Tax could help prevent countries from taking advantage of others when using Eurobonds. By using this tax, countries with lower debt levels may be more willing to participate in a common debt club, leading to benefits for all members. The tax rule can be adjusted to make sure everyone is treated fairly, and the amount of benefit depends on how much the safe asset created by Eurobonds is worth. This tax idea is a new way to solve the problem of free-riding and has not been suggested before in this context.