‘Corona Bonds’ and Europe’s North-South Divide

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It is a cruel twist of fate that the Covid-19 crisis has exposed the basic faultline in the eurozone between north and south. The resulting debate about how to craft a joint response has been bitter.

The compromise agreed provisionally by the Eurogroup meeting of finance ministers on April 9th was a relief. For the Eurogroup to have broken up a second time in a week without a deal would have been a disaster. It would probably not have resulted in a bond-market panic—massive interventions by the European Central Bank have neutralised that possibility for now. But in political terms it would have sent a terrible signal of disunity.

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