publication

A proposal for a Covid credit line

Authors:
Beatrice WEDER DI MAURO
Agnès BéNASSY-QUéRé
Arnoud BOOT
Antonio FATáS
Marcel FRATZSCHER
Clemens FUEST
Francesco GIAVAZZI
Ramon MARIMON
Philippe J MARTIN
Jean PISANI-FERRY
Lucrezia REICHLIN
Dirk SCHOENMAKER
Pedro TELES
2020

It is in the interest of every EU member state that countries in the Union hit by the coronavirus are able to take the necessary measures to control the pandemic and deal with the economic consequences without being constrained, and to do so very quickly. This column proposes a Covid credit line in the European Stability Mechanism, with allocation across member states proportionate to the severity of the public health and economic challenges encountered. While it would involve some coordination and solidarity among member states, the dedicated credit line would reduce risks to economic and financial stability for all while allowing members to sustain their efforts by making their borrowing costs less dependent on individual fiscal situations.