Italy, France and Spain they want to use the 410 billion of the State rescue fund (Mes), in addition to the unlimited funds of the ECB, to fight the economic crisis triggered by the pandemic. Not only that: we also talk about Coronavirus bonds, a particular version of the Eurobonds. The Dutch premier, Mark Rutte, remains cold along with the rest of the "Northern front". But the real news is the historic opening arrived from the German chancellor, Angela Merkel, who didn't say no. The heads of state and government of the EU spoke about all this Tuesday, during a videoconference summit at the end of which they gave a mandate to the president of the Eurogroup, Mario Centeno, and to the number one of the Commission, Ursula von der Leyen, to locate a solution within the next week, when a new European Council is held.
Meanwhile, in the next few days von der Leyen will propose to activate the "Escape clause", the clause that will deactivate the Stability Pact altogether. The president of the European Council, Charles Michel, assured that Europe will do "everything necessary to restore confidence and rapidly support the recovery".
In detail, the Italian Prime Minister, Giuseppe Conte, has proposed to “launch the Coronavirus Bonds and a European guarantee fund to urgently finance the initiatives of individual governments to protect their economies. If we proceed divided we are all weaker”.
I Coronavirus Bonds would be issued by the State-saving Fund. The project met with Rutte's disapproval, but the French president, Emmanuel Macron, sided with Conte.
Much less controversial is the proposal to use Mes funds to support governments. The Spanish premier Sanchez is asking that the intervention of the Fund take place without the conditions foreseen today, which envisage the intervention of a sort of EU Troika. The idea is not feasible in these terms, because the rules would have to be changed and time is not enough. For this reason, Centeno, von der Leyen and the commissioner for the economy, Paolo Gentiloni, will study extraordinary, lighter conditions in the next few hours, linked only to the fight against the coronavirus.
There is also talk of linking the use of the Mes to an intervention by the ECB, which could activate the government bond purchase program on secondary markets (potentially unlimited), putting hundreds of billions more on the table. It's just about the omt, the bazooka created by Mario Draghi on the themes of "whatever it takes": at the time the announcement effect was enough to appease speculators, while now one could decide to use it. However, on this front the number one of the ECB, Christine Lagarde, could clash against the Nordic resistance in the Governing Council. This time not only from Holland, but also from Germany.
