Among the various issues discussed by European leaders meeting over the weekend before last (ahead of a G20 meeting scheduled for April 2), was a proposal for a common bond to be issued by the European Union on behalf of its member countries. The finance ministers of the countries concerned were directed to examine the proposal. George Soros subsequently expressed support for the proposal, saying that the creation of a euro-zone government bond market would bring immediate benefits. He pointed to the structural defects that currently exist with the existence of a central bank but no central treasury and supervision of the banking system left to national authorities. Regulation and supervision of the banking system could rest with the European Central Bank and a central treasury would have the credibility to guarantee and rescue (if necessary) the banking system. Co-ordination of counter-cyclical fiscal policies across the EU would also be facilitated. In the meantime, individual member countries would still be able to maintain their own government bond markets under the control of their finance ministers. However, the head of the German debt issuance agency (German Finance Agency) was quick to reject the idea. Without the existence of a nation of Europe with a common fiscal policy and debt management system such a proposal was premature. Moreover, it would raise Gemany's borrowing costs and therefore would be unacceptable to taxpayers.While Germany has had two failed, ten year, Bund auctions this year its cost of debt does not compare with that of say, Ireland, which last week issued a three year bond at 250 bps over the equivalent Bund. The heads of the French and English debt management offices were quick to point out that investors are still keen to buy their bonds.