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Vote: Motions for resolutions - Feasibility of introducing stability, Motion for a resolution, February 2012.

Governments need to borrow money to finance their expenditure. They do this mainly by issuing bonds, in return for which investors lend them money. The interest rate depends on how much confidence investors have that the government in question will be able to pay back the money. The greater the risk, the higher the interest rate. Countries with unsustainable levels of debt and high budget deficits pay punitive rates of interest, which in turn only worsens their economic and financial outlook and makes it harder to pay off their debt.

To break this vicious circle, the European Parliament in 2012 adopted a resolution asking for the introduction of 'Eurobonds'. A Eurobond would work like a government bond, with the difference that the 17 Member States which use the Euro as a currency – including the more solvent countries - would issue common bonds and would together guarantee paying back the cash received from the investor. The effect would be that financially weaker Member States could borrow money at lower interest rates and thus at lower costs. This would allow them to finance measures aimed at improving their economic situation while safeguarding the interests of investors.