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EU Debt as Insurance Against Catastrophic Events in the Euro Area
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EU Debt as Insurance Against Catastrophic Events in the Euro Area

The Key Questions and Some Answers

Guntram B. Wolff
Bruegel, 2020
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Policy makers in the European Union’s member countries must walk a fine line between inaction and misdirection in their search for a way to combat the economic malaise wrought by the coronavirus. EU-issued debt could serve as an effective, temporary backstop to bring some degree of relief to the region’s economies. As this astute analysis from economist Guntram B. Wolff reveals, this insurance instrument should derive from EU institutions rather than from national governments. Such an approach would be more politically viable, no small feat in the rough-and-tumble obstacle course that is the European Union.

Take-Aways

  • The issuance of EU debt could provide a viable insurance mechanism by which to manage the sharp economic declines that the coronavirus has caused member states.
  • The use of debt to restore economic well-being to countries raises a host of issues and challenges.
  • The way forward for the region is a temporary support system with legal underpinnings and controls. 

About the Author

Guntram B. Wolff is the director of Bruegel, a European think tank.

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