Will Germany embrace Israeli bonds, as other EU states de-bank them on rights grounds?

Germany is best placed to take over handling of Israeli bonds, after Ireland and Luxembourg de-banked them on human rights grounds. The state-owned Israel Bonds giant raises some $2.5bn (€2.2bn) a year on EU markets, but to gain access to European investors it needs a member state’s financial authority to first legally approve its bond prospectuses. The Central Bank of Ireland (CBI) in Dublin had the sole EU mandate to do this until September 2025, when it passed the baton to Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF). But the CSSF is now also stopping approvals on 31 August, after a public backlash against Israel in both EU countries. And while that might leave Israel Bonds briefly in EU legal limbo, Israel still had a politically safe EU financial hub that could step in to save its scheme – Frankfurt in Germany, which was the EU’s top financial centre, according to the Global Financial Centres Index (GFCI), and 15th in the world. Israel might dangle in limbo if its prospectus permits legally revert from the CSSF back to the CBI in Dublin on 31 August, but Ireland declines to issue authorisations. Irish prime minister Simon Harris has asked the European Commission to share responsibility for finding a solution in September. And the European Securities and Markets Authority (ESMA) in Paris said that the rules on prospectus-handovers have not been fleshed out, giving stakeholders wiggle room. "ESMA has not produced any guidance in relation to the transfer of approval [of bond prospectuses]," it told EUobserver. But any limbo would still likely be short-lived, as the CBI could pass on its unwanted Israeli dossier to yet another EU jurisdiction, ESMA also indicated.