Nine EU leaders call for Coronabonds

A joint letter was signed ahead of Thursday's summit

Photo: EPA Italian PM Giuseppe Conte(L), French President Emmanuel Macron

Nine European leaders including Italian Premier Giuseppe Conte and French President Emmanuel Macron on Wednesday signed a joint letter calling for the creation of 'Coronabonds' to face the economic crisis caused by the coronavirus pandemic, ahead of Thursday's EU summit, ANSA reported. The letter was signed by Spain, France, Portugal, Slovenia, Greece, Ireland, Belgium, Luxembourg and Italy, the Italian premier's office at Palazzo Chigi said.

We need to recognize the severity of the situation and the necessity for further action to buttress our economies today,” the nine heads of state said in the joint letter seen by CNBC. The deadly virus has brought all the key EU economies to a standstill, with most people confined at home. Restaurants, cinemas and other retail spaces are closed, and airlines have basically stopped taking off. Meanwhile, the death toll across Europe keeps on rising, with Italy registering a higher number of deceased than China, where the virus first emerged.

“We need to work on a common debt instrument issued by a European institution to raise funds on the market on the same basis and to the benefits of all Member States,” the nine leaders said.Their call comes within about 24 hours from a key conference call between the 27 leaders of the European Union, on Thursday, and adds pressure on countries such as Germany and the Netherlands where the idea of ‘coronabonds’ is deemed unnecessary.

It’s not the first time that the subject of issuing joint debt has been raised in the region. European countries had initial discussions on this issue at the height of the sovereign debt crisis of 2011, but certain nations believed it was too risky to join their debt with other countries, which were deemed at a higher risk of default.

The coronavirus has resurfaced the debate over joint European bonds given the unprecedented financial shock.“The case for such a common instrument is strong, since we are all facing a symmetric external shock, for which no country bears responsibility, but whose negative consequences are endured by all,” the nine leaders said, suggesting that the current crisis is different from the global and sovereign debt crisis, where the region had been affected disproportionally. Nonetheless, certain European capitals do not see the need to go as far as issuing common debt for now.

“If we want tomorrow’s Europe to live up to the aspirations of its past, we must act today, and prepare our common future. Let us open this debate now and move forward, without hesitation,” the nine leaders said in their joint letter.

As of Wednesday morning, there were more than 182,000 coronavirus cases in Europe.

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