On Saturday, the head of the euro zone’s crisis fund told CNBC that Europe’s unprecedented stimulus plan has differentiated how many investors perceive in the region. Investors criticize Europe for the absence of coordination and shaky institutions, most prominently since the debt crisis took place.
Still, according to the European Stability Mechanism head, Klaus Regling, there is a different opinion in the market at present, after the European Union confirmed to raise funds in addressing the pandemic jointly. Regling is the head of the European Stability Mechanism, a crisis fund set up in 2012.
Regling mentioned at the European House Ambrosetti Forum that many people told him they are more positive in Europe than the last ten years because of the quick reaction, the significant volume of money, and the excellent coordination.
In May 2020, almost two months since the lockdowns, the EU announced the first measures to aid nations dealing with the pandemic’s economic shocks. This topic escalated in July when the 27 countries of the EU shared their plan of coming up with $888 billion (or 750 billion euros) in public markets to invest across the region. The program is still facing legislation but is the first agreement among the nations to issue such a vast joint debt.
Markets approved of the move, with some calling it Europe’s “Hamiltonian moment,” based on the deal made by America’s Founding Father Alexander Hamilton, to transform previous debts into joint obligations of the federal union. Citizens in Europe believe that the deal starts the precedent for common debt issuances in future crises.
Regling also pointed out that the world’s response to the crisis lacked coordination compared to the global financial crisis in 2018. He cited that “the United States has moved away from multilateralism” and the “big conflict between China and the U.S.”