BlackRock’s Hildebrand Calls for EU Bonds to Rival Treasuries

This content was published on June 5, 2025 - 11:50

2 minutes

(Bloomberg) — There has never been a better time for the European Union to create a safe and liquid government bond market to rival US Treasuries, according to Philipp Hildebrand, vice chairman of BlackRock Inc.

The opportunity for greater joint issuance by EU states is “immense,” Hildebrand, a former head of the Swiss National Bank, said at an event in Frankfurt organized by the International Capital Market Association. “There is political momentum and a pressing need for Europe to invest in its own defense, requiring capital markets to serve as a critical funding source.”

Donald Trump’s sweeping trade tariffs have shaken investor faith in Treasuries and the US dollar as global safe-haven assets, spurring appetite for alternatives — including the euro and German bunds. At the same time, Europe’s push to end its military dependence on the US has opened the way for hundreds of billions of euros to be spent on defense — requiring a jump in bond issuance.

EU’s €150 Billion Defense Fund Receives Preliminary Approval

For now, US Treasuries are “unequivocally” the world’s preferred safe asset, cementing the US dollar’s role as the world’s premier reserve currency, Hildebrand said.

The European Union only started ramping up debt issuance after the pandemic, aiming to bolster government budgets as economies shut down. It currently has no plans to issue bonds that increase its debt load beyond 2026.

Ideally, issuance of the EU bonds needs to be scalable and consistent in nature, Hildebrand said. They must hold “full sovereign status” and be included in key sovereign bond indexes, he added.

The bloc is currently treated as a supranational issuer, which the EU cites as a key reason why its borrowing costs are higher than those of European governments with similar ratings.

“It would lower borrowing costs and stabilize them during periods of instability,” Hildebrand said. “This need for defense spending can unify efforts toward a common safe asset.”