What is the German stance on joint EU borrowing?

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German Stance on Joint EU Borrowing Amidst Coronavirus Crisis

Germany's position on joint EU borrowing, specifically concerning the proposed "coronabonds," remains cautious and subject to ongoing discussions, though not outright rejected. While Chancellor Angela Merkel has not entirely dismissed the prospect of a corona crisis bond, she has emphasized that these are initial deliberations, with specific mechanisms and involvement of existing financial institutions being explored.
Initial Discussions on Corona Crisis Bonds

The concept of "coronabonds" has been put forward by countries like Italy and France as a means to collectively address the severe economic repercussions of the coronavirus outbreak. The proposal aims to enable heavily impacted nations to secure borrowing without being individually stigmatized as financially vulnerable. This initiative seeks to prevent a recurrence of past crises, such as the eurozone debt crisis, where certain economies were left to manage severe fallout independently.
Merkel's Cautious Acknowledgement

German Chancellor Angela Merkel has indicated a willingness to engage in discussions regarding corona crisis bonds, breaking from a more traditional stance of outright opposition to mutualised debt. She acknowledged that the EU executive has presented proposals and that these are part of initial talks. However, Merkel also pointed towards potential avenues for intervention, hinting at the possible involvement of the European Investment Bank and the European Stability Mechanism in any financial support measures.
Historical German Hesitation on Mutualised Debt

Historically, Germany has expressed significant reservations regarding the idea of mutualised debt, often referred to as "eurobonds." This reluctance stems from a deep-seated distrust among some northern European nations towards larger debtors, such as Greece or Italy, and concerns about assuming responsibility for their financial obligations. The concept of eurobonds has been a politically challenging issue in Germany for decades due to these historical sensitivities and economic philosophies.
Finance Ministers to Deliberate on the Issue

The responsibility for further deliberation on this matter has been placed with the finance ministers of the EU member states. They are scheduled to convene and discuss the proposals and potential implications of joint borrowing mechanisms. This meeting signifies the next formal step in evaluating the feasibility and structure of any collective financial response to the economic crisis precipitated by the pandemic.

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What is the German stance on joint EU borrowing?

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