Letter — Axa vs French state: bond differential is not a quirk
Scan of the published letter (self-hosted image).
Katie Martin notes that governments are generally viewed as the safest borrowers because they can always raise
taxes or print money (“RIP to safe havens”, Opinion, September 24) in order to repay their debts. In France’s
case, however, the second option does not exist. As a Eurozone member, Paris does not control the currency in
which its debt is issued; that power lies with the ECB. This distinction matters. The yield crossover between
Axa and French government bonds highlighted is not a quirk, but a reflection of the limits of fiscal sovereignty
without monetary sovereignty. Strong corporates can sometimes inspire more confidence than states constrained by
the euro’s institutional architecture.
Piers D Watson Sydney, Australia
