EU arsenal

24 March 2020 By Lisa Jucca Follow @LJucca

The European Stability Mechanism was set up to support troubled euro zone countries. Its 410 bln euros of firepower could help Italy and others with the coronavirus pandemic and unlock more ECB support. By stopping short of common borrowing, it may also be acceptable to Germany.

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Euro zone finance ministers will discuss on March 24 European Commission proposals to make use of the European Stability Mechanism, the bloc's bailout fund, to fight the economic impact of the coronavirus pandemic.

Italy favours allowing the ESM to provide financial support with no conditionality to the economies hit by the Covid-19 outbreak, Reuters reported on March 24, citing a government source.

One of the instruments at its disposal is the so-called Enhanced Conditions Credit Line, which can be extended to governments under certain conditions.

Bank of Portugal Governor Carlos Costa called on March 23 euro zone governments should consider issuing joint debt in the form of ‘coronabonds’.

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