The Search for the Right European Financing Instruments in the Corona Pandemic: ESM Liquidity Assistance Versus Corona Bonds

The purported advantages of corona bonds over the ESM are meagre to non-existent, says Friedrich Heinemann (EconPol Europe, ZEW). The challenge we face is to contain the spread of COVID-19 while stabilising the economy and ensuring eurozone states have sufficient liquidity and the ESM is a suitable tool for pursuing these ends. However, we should wait until the acute phase of the crisis has passed before engaging in discussion of how to handle high debt levels and possible cases of insolvencies among eurozone nations, and the difficult question of who finally bears the burden of unsustainable debts.