Covid19 / Eurobonds and debt mutualisation: what the Treaties provide for
With its latest decisions, "the ECB has bought us some time," explains Carlo Altomonte, professor of European economic policy at Bocconi University. The European Central Bank will put a thousand billion euros of purchases of financial assets on the market "and this money will probably be enough to face the crisis that Italy will have to face in terms of new public debt". However, warns the professor, "In the medium term there will be a problem: the public debt of all member states will increase from 20 to 30 percentage points and when the ECB stops buying it, in December 2020, the market will test the willingness of the Central Bank to support it in the long term". This will lead to stress on the Eurozone and, continues the professor, "to avoid future problems we need to intervene today with a fiscal instrument". With a clarification: "Coronabonds, Eurobonds and any form of debt mutualisation are not provided for today in the existing legislative framework, so the Treaties and probably the German constitution would need to be changed". Consequently, concludes Altomonte, "we must invent debt instruments that are common and accessible to all member states. Without prejudice, let's see whether we can activate these instruments between the lines of the European Stability Mechanism and/or the European Investment Bank".