Euro-Zone Rescue Talks Are Irrelevant
The ECB is providing enough firepower for now. The ESM should only be brought into play when it is truly needed.
Empty streets.
Photographer: Filippo Monteforte/AFP
The Covid-19 epidemic has forced the euro zone’s finance ministers to think of innovative ways to combat an inevitable recession. They met this week to discuss how to use the European Stability Mechanism, the single-currency area’s rescue fund, to help countries fund a large-scale fiscal stimulus.
Yet this debate appears largely irrelevant, at least for the moment. The European Central Bank has already launched a 750 billion-euro ($810 billion) asset-purchase scheme that will provide a meaningful safety net for euro-zone governments as they boost spending and increase their deficits. The ECB said its commitment to the euro has “no limits.” This is more important than any credit line coming from the rescue fund.