France and Germany, the economic leaders of the European Union, have promoted the idea to start a special fund to back the economic recovery after the crisis.
The fund is expected to accumulate 500 billion euros, which is around 4% of the EU's GDP. At the same time, this means it will make up 50% of the current EU budget. How to allocate such funds? This is possible through issuing bonds backed by the Euro Commission.
Is it really all about saving the economy? Some experts say that the topic is much deaper than that.
For now, it's clear that the EU has been suffering from an existential crisis for the last few months. The absence of financial solidarity amid an unprecedented GDP decline led to the rapid growth of anti-European sentiments in the EU countries suffering from the crisis most of all. Even the liberal and pro-EU Italians started expressing their thoughts that the EU integration without solidarity is pointless. Coupled with the fact that the EU countries regained the control over the policies like border control, financial support for businesses etc., we have got a dangerous mix, which may eventually speed up the disintegrational processes in Europe.
Soros's Got an Idea
It's interesting to note that a week before, George Soros, a disputed personality in the financial world, put forward a similar idea. In particular, he said that if the EU wanted to save the economy, they would have to start issuing EU bonds. Those bonds would come with minimal interest rates like 0.5% and would be subject to buying back.
