EU exec to push for EU bonds to be included in indexes to boost euro role

DUBLIN, Sept 17 (Reuters) - The European Commission will push for bonds issued by the European Union to be included in international bonds indexes to boost the use of the euro in global transactions and as a reserve currency, the EU's economic commissioner said.

Speaking to an economic seminar before a meeting of EU finance ministers and central bankers, Valdis Dombrovskis said up to now, EU bonds were not regarded as sovereign by markets and therefore were not included in sovereign bond indexes.

"This negatively affects the demand for these bonds, and their usability as a liquid and safe asset for investors. It is time to revisit this issue," Dombrovskis said.

He said there was now €800 billion ($918.64 billion) of EU bonds outstanding which made the EU bond market the second-largest market for triple-A-rated debt in Europe, and the third globally.

This is still tiny compared with the $32 trillion of the U.S. Treasuries market. The biggest triple A rated issuer in Europe is Germany with around €2.5 trillion outstanding.

More EU bonds would be issued in the years to come, Dombrovskis said, also as part of the next EU long-term budget, so the liquidity of the market would grow. Dombrovskis said secondary market liquidity in EU bonds was now similar to that of the large sovereign issuers in the EU.

He noted EU bonds could be used as collateral equivalent to sovereign bonds with clearing houses and for ECB re-financing operations and the EU had many characteristics of a sovereign: a budget, access to its own resources, power to legislate, implement and enforce laws, and a common currency for the euro area, supported by an independent central bank.

"So, we will engage with index providers and the financial industry to support the inclusion of EU bonds in sovereign indexes and contribute to creating a more efficient EU bond market," Dombrovskis said.

"This is only one example of how we can and should – through a series of concrete steps – reinforce the global role of the euro," he said.

($1 = 0.8709 euros)

(Reporting by Jan Strupczewski; Editing by Andrew Heavens)