Giuseppe Conte calls on EU to use full financial firepower
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Italy has called on the EU to use its powerful economic rescue fund to extend credit lines to all member states to fight “a global shock that has no precedents in modern history” as the death count from coronavirus in Italy overtook China for the first time.
Giuseppe Conte, Italian prime minister, told the Financial Times that the European Stability Mechanism, a €500bn fund that was established in 2012 during the eurozone’s sovereign debt crisis, needed to be put into action to urgently respond to the virus outbreak that has claimed more than 3,400 Italian lives so far.
His call came as France also demanded urgent joint action across the eurozone, imploring reluctant countries led by Germany to join forces and back the use of the ESM or permit the issuances of common bonds in the fight against the crisis.
Bruno Le Maire, French finance minister, warned in parliament that “either the eurozone responds in a united manner to the economic crisis and emerges stronger, or it is all over the place and is in danger of disappearing.”
The European Central Bank intervened in stricken markets on Wednesday night as it launched a late-night plan to buy an additional €750bn in bonds.
Mr Conte praised the moves taken by the ECB this week but said more must be done to tackle a downturn that economists fear could be even sharper than the last financial crisis. “Knowing President [Christine] Lagarde and having had several conversations with her I had little doubt — the ECB has the will and the power to support the euro and it will do so now and in the future. Monetary policy alone cannot solve all problems, we need to do the same on the fiscal front and, as I already mentioned, time is of the essence”.
Mr Conte said that “the best, probably the only way” to stave off large-scale economic damage in Europe would be the creation of a common European debt instrument to “fight against the socio-economic consequences of the pandemic”.
