Thread by @MarkusEconomist

🦠#CoronaCrisis crisis & European Economy: (1/6)
What's good for 🇩🇪Germany, should be good for 🇪🇺Europe
German initiative of
(a) Kurzarbeit (gov. covers part of wage bill) [transfers to firms/workers] and
(b) Liquidity bazooka = low-interest credit for debt re-payment

(2/6) Credit is granted to firms by (national) fiscal authority for x, say 7, years.
Why tax authority? Tax authority can enforce repayment (together with tax collection) + senior of credit status for gov. => limits credit risk
(credit is as safe as 'tax credit')

(3/6) @EIB grants funds to national authority and issues bonds to sovereign wealth funds, @ECB, @ESM, etc.
🇪🇺 @EIB is the European equivalent to 🇩🇪German development bank @KfW

(4/6) Why not only recapitalize banks directly?
(i) Banks are unlikely to pass on funds.
(ii) Politically controversial
(iii) banks also benefit from this proposal since # of NPL (non-performing loans) will decline

(5/6) see complementary measures, e.g. @R2Rsquared @FuestClemens @henrikmllr @sascha_steffen @MSchularick @Isabel_Schnabel @jakob_eu @MFratzscher @michael_huether @ManfredWeber @lugaricano @VDombrovskis @Lars_Feld @GFelbermayr @jsuedekum @JanKrahnen @vonderleyen @GuntramWolff

(6/6) International solidarity is key to fight a common enemy

& thanks to all health care professionals