Some thoughts on the rumored "just like Xmas, we'd all like to go (stay) home for Easter, too" deal in the EuroGroup. 1) Headline figure of almost EUR500bn is a good downpayment, even if it includes "hypotheticals" (ESM) and leveraged instruments (EIB). 2) Compoments known 1/n
EIB - EUR25bn (EUR200bn with leverage); EC SURE - EUR100bn; ESM creditline of apparently up to EUR240bn(?) + and some voluntary medical supplies. 3) Key milestone is the agreement on @ESM_Press creditline, which sets precedent for European backstopped financial assistance in 2/n
joint crisis/exogenous shock with the ONLY conditionality that the resources be spent in a earmarked manner towards the crisis (shared problem). 4) Few if any MS will take any money from @ESM_Press, given @ecb PEPP program, so this is an OMT-like offer; 5) Key though is the 3/n
requirement for merely "earmarking joint resources" - this sets the precedent that a new "recovery fund for #Covid19" can be set up along the same lines, meaning that a leveraged "Corona Fund" (maybe as part of MFF) could be launched by @EUCouncil and - with EIB-like leverage 4/n
reach a macroeconomically relevant scale in the next several years of #Covid19 recovery. Important first down payment made by Eurogroup - @EUCouncil must make the needed innovation to implement genuine forward-looking European pandemic solidarity. #InnovateInEachCrisis Ends
