The pandemic divides nations

The pandemic divides nations

Due to the pandemic, many businesses are on hold all over the world, and the economy dropped sharply.

Governments are fighting the decline with stimulus packages meant to ease the market. Packages worth anywhere between $800 billion to $2 trillion are on the line in many countries.

Eurozone members want to apply the same formula. Finance ministers from the Eurozone reunited to discuss the possibility of providing stimulus meant to soften the economic impact of the pandemic. At the moment, economies are halted. The pressure is on the governments to support the businesses and the citizens.

The meeting took 16 hours, with no agreement in sight. The ministers' opinions differ on how it is best to provide loans, and if there will be a new debt instrument that will need development.

The Netherlands seems to veto every proposition. They want the loans to have predetermined conditions. They also blocked the idea of creating joint debt issuance proposed by Italy, France, Spain, Ireland, and Luxembourg.

The Dutch finance minister, Wopke Hoekstra, said that his country “was and remains against the idea of euro bonds (an instrument that would combine European securities).” He believes that the idea of guaranteeing debts of countries is not reasonable.

The thought of asking other countries for more money doesn’t appeal to members of anti-EU parties. For example, Germany’s AfD is against the corona bonds, as they say, it doesn’t “justify that German taxpayers are bled for the debt of the whole EU.” Also, the Italian anti-EU party leader, Matteo Salvini, declared that he doesn't want Italy to ask for money from Berlin or Brussels.

A half-trillion-euro stimulus package is needed to revive the continental economy, this being the most significant package ever prepared by the Eurogroup.

Another video-meeting will take place on Thursday resuming the talks and trying to find a way to overcome differences.


Sources: cnbc.com, theglobeandmail.com

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The information presented herein is prepared by CAPEX.com and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

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