Sovereign Debt Revisited

The panel brought together Andrea Binder, Christian Kastrop, and Isabel Schnabel, who offered complementary perspectives from academia, policy, and central banking.

The discussion addressed the shifting landscape of fiscal policy in an era marked by overlapping crises—from geopolitical tensions to climate change and the need for large-scale public investment. Rather than framing public debt solely as a constraint, the panel explored its function as a strategic instrument, raising questions about sustainability, intergenerational equity, and the capacity of states to act under conditions of uncertainty. As Andrea Binder put it, “intergenerational justice is measured in CO₂ particles in the atmosphere, not in debt-to-GDP ratios,” highlighting the need to reassess how fiscal responsibility is defined in the context of climate change.

Particular attention was given to the changing boundaries between monetary and fiscal policy, as well as to the institutional frameworks that shape debt governance in Europe. The speakers highlighted that debates about public debt are ultimately debates about political priorities: what states choose to finance, under which conditions, and with what long-term consequences.

The event underscored the importance of revisiting established economic narratives and engaging more explicitly with the political and historical dimensions of sovereign debt.