NICOLAS VERON: Senior Fellow, Bruegel, and Senior Fellow, Peterson Institute for International Economics.

The EU budget deal of July 21 marks a historic moment, because it's the first time that the European Union has acquired significant financial firepower of its own. (There was something of that in the original European Coal and Steel Community of the early 1950s, but it was small in scale and soon phased out.) The debt issuance capacity will establish the European Union as a significant player in official bond markets, in the same league as large EU member states in terms of volumes and liquidity over the next few years.

As for semantics, irrespective of whether the moment is deemed Hamiltonian or not--keeping in mind that the institutional development path of the European Union is completely different from that of the United States--that EU debt deserves to be called a Eurobond. Eurobonds were the matter of much debate over the past decade, and widely considered Utopian (including by this observer) until German Chancellor Angela Merkel's astounding volte-face on May 18, 2020. That's when she and French President Emmanuel Macron jointly announced their support for what has now become the stimulus package, or in Brussels jargon, NextGenerationEU.

Of course, the official discourse is different: the EU issuance is proclaimed to be a one-off process that does not set a precedent, is thus not a permanent feature, and is thus not a Eurobond. In the short term, this discourse is necessary to ensure political consensus. But investors have already seen through it.

Once established in the financial landscape, EU debt will become such a central reference in the EU financial...