Tonight's @EUCouncil was a YUUUGE disappointment, but thanks to @ECB all is not yet lost for Europe. Several things must be clear though on the path ahead; 1) The PEPP is mutualization of #Covid19 related expenses onto the @ECB balance sheet for a VERY long time. Means MS 1/n
now has the capacity to do what they need to do to save lives for as long as the emergency lasts. This makes the ESM frankly redundant for now - unsurprising since it was never designed to bailout a large MS (OMT for that) and much less deal with a symmetric EA-wide shock 2/n
Get over it @MinPres! It is also less clear that a "Healthcare-Focused Corona-Bond" is really useful now, as 9 heads of state/gov suggested. Again - let the ECB do its job and start worrying about how the recovery can be made symmetric - that is when new joint instruments 3/n
will be needed - post-PEPP. My suggesting is that @EUCouncil takes full advantage of the interest rate outlook and thinks BIG - you need something big enough to matter in the recovery, so 2-3% of EA/EU GDP for 2-3y.... all told a BIG ROUND number of EUR1tr in new 4/n
European COVID-19 Investment Recovery Bonds (ECIRBs). They can be issued by the relevant European institution - ESM for EA, or @EU_Commission or @EIB for the EU - backed by the capital of each (OK - earmarked addition to new MFF would be needed for EC) and with a long enough 5/n
maturity to be repayable through the tax receipts of the additional economic activity they would generate. Obviously ECIRBs would be eligible for purchase by the @ECB. ECIRBs would avoid a huge political fight over "accountability" by being predominantly aimed at funding EU's 6/n
existing and already agreed long-term priorities in #eugreendeal and digital infrastructure ect. Pan-European funding for pan-European strategic priorities to get out of the #Covid19 crisis as one Europe. Some ECIRBs could also be used to fund the building of adequate ICU 7/n
units in all member states and a genuine EU "disaster preparedness stockpile" of what we now know is needed in a public health emergency. The focus on joint public investments is important, in so that it will solicit no (OK - less...) knee jerk political opposition in Berlin 8/n
The Hague and elsewhere than joint instruments aimed at general "budget support" and it offers Europe the opportunity to quickly return to a common push towards its pre-virus priorities. ECIRBs must, however, be agreed now, as only the "crisis emergency" can generate the 9/n
political space to do so. There can be no excuse for the @EUCouncil not to follow in the Hamiltonian footsteps of the @ECB in the next couple of weeks. Symmetric crisis must not become asymmetric recovery. ENDS
