Euro zone finance ministers sealed a new coronavirus stimulus package on Thursday worth around half a trillion euros, but officials delayed a crucial decision on whether to issue joint debt instruments.
asked in late March for a common debt instrument which could raise funds in public markets and help with the costs from the virus. The Netherlands, in particular, is fiercely against the idea. There are concerns that taxpayers in northern nations would be financing the massive debt piles of southern countries. Thursday's meeting culminated with the simple compromise to ask the heads of state to address this subject at a later stage.
"We also agreed to work on a Recovery Fund to prepare and support the recovery … Such a fund would be temporary, targeted and commensurate with the extraordinary costs of the current crisis and help spread them over time through appropriate financing," the finance ministers said in a statement Thursday night.
The wording suggests that despite the compromise to "work" on another financing instrument, the ministers don't know how this might be funded in the future. "There are still clear and expected differing views on how to finance such a fund. Some countries would like to use 'innovative financial instruments' — read Eurobonds, while others would like to find other financing sources," Carsten Brzeski, chief economist at ING, said in a note Thursday night.
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