The Vice President of EU commission, Valdis Dombrovskis, has announced a trillion-dollar fund to get the corona-damaged European economy back on track. “We could finance the reconstruction fund with bonds backed by Member States,” Dombrovskis told the “Handelsblatt“.
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An order of magnitude of up to 1.5 trillion euros is under discussion. “I could imagine such a financial framework,” said Dombrovskis. In any case, the EU budget must be the focus of reconstruction. It is “rather not” about higher contributions from net payers like Germany. “We are working on new financing instruments instead,” said Dombrovskis. In such a severe crisis, one has to “break out of old thinking,” said the Latvian.
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Return of the Corona Bonds dispute?
According to the newspaper, Dombrovskis left open whether the planned European bonds are the controversial euro bonds. A number of EU countries – including France and Italy – are pleading for this, Chancellor Angela Merkel and the heads of government of other northern European countries oppose it. The European finance ministers had at least one last week after tough negotiations Corona rescue package worth 500 billion euros notified. There are also precautionary credit lines that can be called up from the European rescue fund ESM.
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France’s finance minister Bruno Le Maire had previously said that there would be a reconstruction fund as a further element after the crisis. Here the volume is still open. However, Le Maire indicated that it could also be 500 billion euros. The dispute over common bonds of the euro countries was excluded, but flared up again immediately.
Banks are again facing difficulties
Commission Vice President Dombrovskis now warned of the economic consequences of the weeks-long standstill. “A severe recession will be inevitable,” he said. It might be even worse than after the financial crisis in 2009. The banks could also face difficulties again. “I do not rule out that we will again have problems with non-performing loans (NPL),” said Dombrovskis.
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On April 24, the EU heads of state and government want to discuss the economic consequences of the corona crisis in a video conference. The reconstruction fund is also an issue, said Dombrovskis.
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