The focus is understandably all on COVID, as the virus attacks all European countries, and a war-like response is needed. But economic policy makers also need to act, so economy does not break down, so that the peoples of Europe have income, to buy what they need to survive.
@ojblanchard1 proposed to use the ECB's OMT process to support countries in need in this unprecedented crisis. That is a good idea.
I would go a step further. Using the OMT to support local bond markets, should be without stigma. It would be a logical ECB/EU/ESM response to an outside shock that has nothing to do with local fiscal policy (so limited conditionality needed, if any).
To eliminate the stigma, many countries should apply at the same time, so it is not just and Italy or Spain issue, but an issue of broader European solidarity.
The key signal would be to have France participate (and by the way French bonds did not trade so well last week, but that is not the key point).
The key point would be to have France show the way, and have the ECB support its bond market via OMT and that way make is politically acceptable for all others to get the same support. @EmmanuelMacron you can do it!
I will leave it at that. The ECB should do everything it can to make sure financial conditions are as easy as possible, so everybody else can focus 100% on fighting COVID. "Emergency OMT for all" would be the real deal.
