After weeks of frenetic debate, European leaders have approved some concrete measures to combat the economic impacts of the COVID-19 pandemic in Eurozone countries.
An official EU website released the substance of the measures late last night, which include at least €2.7 billion for direct assistance to medical to healthcare facilities, as well as a fund “which could support” €200 worth of credit for small- to medium-sized businesses hit by the coronavirus.
Above all, attitudes have become more relaxed when it comes to granting aid to the hardest-hit areas and countries of the EU.
But the new economic crisis has re-ignited old conflicts latent in the EU, about wealthier northern countries funding supposedly profligate southern ones; and here Italy again takes the center stage, both as the country in the world and EU hardest hit by COVID-19, as well as the biggest traditional target of ire from northern europe.
Along these lines, one measure that has been frequently discussed recently, the issuing of so-called ‘coronabonds’, is not being implemented as a result of last night’s agreement.
Coronabonds are a proposed form of joint-national debt, issued especially as a result of the COVID-19 pandemic, and to be repaid not by a single European country but by a basket of them. Such a measure, if it could be approved, “potentially unlocks targeted, unlimited bond purchases by the ECB, helping alleviate strains on vulnerable countries’ finances, most obviously in Italy.”
The concept of coronabonds is not too distant from a previously proposed multi-country ‘Eurobond’, which idea has also been repeatedly dismissed in recent years – most of all by conservative Germany.
BRRR: Printing Money
The amount of monetary and, now, fiscal stimulus being deployed – most will argue appropriately – to combat the economic effects of COVID-19 are prompting many in the crypto space to forecast a return to high inflation in many developed economies, whereas in recent decades it has been relatively low.
The prospect of high inflation rates touches the heart of what many see as one of the most important use cases of cryptocurrencies like Bitcoin, whose already low inflation rate is not subject to debate outside of the inflation rules programmed into its code and adopted by a majority of nodes and miners.
Although the dollar has not yet shown any signs of flagging in its value (pictured above against Chinese renminbi), it is still very early days in forecasting what the full impact to the global economy will be, and which specific areas will be most hit.
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