Which EU countries are supporting coronabonds?

Macro

Christopher Dembik

Head of Macro Analysis

Summary:  Tonight's Eurogroup meeting will discuss technical aspects of coronabonds, amongts other things. Despite opposition from the Netherlands, it is likely that EU leaders will go ahead with this idea and announce some form of common EU issuance at their next meeting due on 26 March.


Yesterday, the ECOFIN council activated the “general escape clause”  in the stability and growth pact which suspends restrictions on borrowing and spending to deal with the COVID-19 outbreak. Today at 18:30 CET, the Eurogroup is due to convene via videoconference to discuss the launch of coronabonds, amongst other things. The below map shows EU countries’ support to coronabonds. Contrary to 2012 when Germany firmly opposed to Eurobonds, Chancelor Merkel is open to discussion and could support this initiative on the condition it is well-structured (amongst the prerequisites, it needs to be a temporary emergency tool administrated by the ESM). The Netherlands will be more complicated to convince. Following yesterday’s meeting, Dutch finance minister clearly stated that the suspension of EU budget rules is enough for governments to cope with the crisis. The Netherlands might be the most vocal opponent to coronabonds at tonight’s Eurogroup but it is isolated as support for some form of common EU issuance is growing. The Eurogroup meeting will be mostly devoted to technical aspects of coronabonds and should not conduct to any final decision. The EU leaders, that are due to meet on 26 March, will have the final word. It is highly likely that they will agree on some sort of temporary common EU issuance.

 

Click to enlarge image.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.