The EU’s coronavirus stimulus package needs more scrutiny, according to the head of Germany’s Bundesbank. President Jens Weidmann criticized the idea of joint EU debt as “fundamentally dubious.” The president of Germany’s central bank Jens Weidmann has spoken out against elements of the EU’s coronavirus rescue package, calling for greater oversight of how the funds are used. The rescue package should “not be used as a springboard to large-scale EU debt becoming a regular form of budget financing,” he said in the latest interview. Instead, the central banker called for the use of a control instrument that would ensure funds “are used sensibly and efficiently.”
Weidmann has been heading the German central banksince 2011. Throughout the years, he has opposed the push for the joint borrowing scheme that would allow poorer EU countries to take out cheap loans while the richer member states effectively guarantee that the money would be paid back. EU leaders last week agreed on the historic €750-billion ($821-billion) rescue package, which allots €390 billion to countries as non-repayable grants, with the rest taking the form of loans. The EU Commission plans to take on an unprecedented amount of shared debt on financial markets in order to finance the package.
Weidmann said it remained important that the EU prove its ability to respond in a crisis. “Solidarity in Europe — including financial solidarity — is the right thing to do in this situation,” the Bundesbank president said. However, he called on politicians to put limits on the aid. Politicians also need to “regularly review [Germany’s] reduced working hours program,” Weidmann said, referring to “Kurzarbeit,” a wage subsidy scheme that allows struggling companies to decrease employees’ working hours instead of firing them.
Source: DW
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