Coronabond yes or no? Next week the European Council will meet to decide: at the moment there are some countries that have already indicated their opposition, including Germany and the Netherlands. The problem, however, in addition to the political agreement, is the concrete feasibility of such an operation. Second Klaus Regling, director of the eurozone bailout fund (MES)Indeed, it would take between one and three years to set up a new European institution capable of issuing the so-called Coronabonds. Any further short-term joint debt issuance, added the German economist interviewed by the Financial Times, should therefore derive from existing mechanisms. "And anyway the European institutions have already issued more than 800 billion euros collective debt in total," added Regling.
Se the aim is to cover short-term financing needs related to the crisis, such as expanding health care or supporting businesses according to Regling “the only way is to use existing institutions with existing toolswhile a long term there are other options”. For a new institution “it will take one, two or three years and the Member States have to invent capital or guarantees or assign future revenues. You can't create bonds out of thin air." In the short term, therefore, according to the head of the ESM, the promotion of mutualized debt issuance should instead take place through the three already existing EU institutions: the ESM, the European Commission or the European Investment Bank.
For example, there may be a possibility that the commission will issue more debt under the auspices of its next seven-year budget, Regling said. He added that there are arguments for particularly hard-hit countries like Italy to have their budget contributions reconsidered. Regling also sees no current need to increase the lending capacity of the ESM, which amounts to 410 billion euros, saying “there is plenty available”. He also stressed that countries like Italy continued to enjoy market access, making a clear distinction between current circumstances and the euro crisis that began ten years ago. However, the idea of using the Mes is politically difficult in Italy, given that the Eurosceptic parties say that this would entail harsh conditions for the country. But Regling clarified that ECCL loan conditionality would be very different from the era of the euro crisis.
