central bank governors of Finland and Spain revived ideas such
as raising cash through a common "safe asset" or via existing
institutions of the European Union to finance the response to
"At this critical juncture, it is essential that euro area
governments get their acts together and agree to a coordinated
European fiscal response," Finland's central bank chief Olli
Rehn told a press conference.
"There's a saying: never waste a crisis. Therefore it's
important that euro area governments agree at this critical
moment on some kind of a safe asset that could provide sturdy
support for financing," he added.
His Spanish counterpart, Pablo Hernandez de Cos, called for
adopting a common fiscal policy using the euro zone's bailout
fund, known as the European Stability Mechanism, the European
Investment Bank, the EU's common budget or other "risk sharing"
"Greater ambition and coordination are not just an option; they
are a necessity," he said in a statement.
As they spoke, the head of the European Commission Ursula von
der Leyen opened the door to loosening debt rules for member
states and issuing common euro zone bonds to cushion the impact
of the coronavirus outbreak.
With economic activity curtailed across Europe, infection
numbers still on the rise and markets gripped by fear, the ECB
set on course to buy 1.1 trillion euro ($1.18 trillion) worth of
bonds this year in order to keep yields low.
Yet this won't save Europe from a recession.
In an interview with Reuters, de Cos said the contraction would
be "significant" not only in Spain, one of the European
countries most severely hit by the virus, but also globally.
His French counterpart Francois Villeroy de Galhau told a French
radio station he expected the euro zone's second-largest economy
to contract this year but grow again in 2021.
"There's every reason for this shock to be temporary if we
retain our ability to start again," Villeroy told BFM Business.
(Reporting by Jesus Aguado in Madrid, Anne Kauranen in Helsinki
and Leigh Thomas in Paris; Writing by Francesco Canepa in
Frankfurt; Editing by Hugh Lawson)
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