EU Leaders Clash Over 'Corona Bonds'... "Two Weeks to Reach Agreement"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] European Union (EU) member states clashed over the issuance of 'corona bonds,' a Eurozone joint bond, as a measure to minimize the economic impact caused by the novel coronavirus infection (COVID-19).

On the 26th (local time), according to Bloomberg and others, the 27 EU member state leaders held a video conference to coordinate COVID-19 response measures. At the meeting, after nearly six hours of discussion, the EU leaders agreed to give Eurozone finance ministers two weeks to come up with strong economic countermeasures.

Italian Prime Minister Giuseppe Conte said at the beginning of the discussion, "We want a strong and sufficient fiscal response using groundbreaking financial measures suitable for a war," and promised to give ten days to the EU summit, the European Commission, the European Parliament, the European Central Bank (ECB), and the Eurogroup (Eurozone finance ministers' consultative body) to come up with appropriate solutions. Spain later expressed support for this, but due to opposition from some member states including Germany, it was finally agreed to have a two-week period.

Charles Michel, President of the European Council, told reporters after the meeting, "This crisis is a very exceptional situation," and added, "A strong response is necessary." Ursula von der Leyen, President of the European Commission, urged through a joint statement that "large-scale coordinated international action is needed."

EU member states have recently experienced disagreements over the so-called 'corona bond' issuance issue. The corona bond plan, referring to Eurozone joint bonds, is similar to the 'Eurobond' proposed during the 2010 Eurozone debt crisis. Eurobonds are bonds jointly issued by member states instead of individual government bonds issued by each member state to share fiscal risks. During the Eurobond discussions, methods such as joint guarantees by member states were proposed, but the differences in positions among member states were too large, and no results were achieved.

If EU joint bonds are issued, fiscally vulnerable member states can reduce borrowing costs and credit risks, thereby alleviating economic pressure. On the other hand, for fiscally sound member states, it could act as a burden by increasing funding costs and lowering credit ratings. Currently, countries demanding the issuance of corona bonds include France, Italy, Spain, and Greece, while Germany, the Netherlands, Austria, and Finland oppose it.

Earlier, Christine Lagarde, President of the European Central Bank (ECB), stated at a recent Eurozone finance ministers' video conference that the joint issuance of bonds by Eurozone governments should be seriously considered. Utilizing this would allow member states heavily affected by COVID-19, such as Italy, to borrow at low interest rates and use the funds to support hospitals and prevent corporate bankruptcies.

The spread of COVID-19 in Europe remains severe. Italy's cumulative death toll reached 8,165, an increase of 662 from the previous day. The cumulative number of confirmed cases was tentatively counted at 80,539, an increase of 6,153. Spain saw 6,832 new confirmed cases in one day, and Germany also reported an increase of 6,323 cases.

This content was produced with the assistance of AI translation services.