Countries would not be allowed to use the money in the fund to repay existing obligations, which in Italy’s case totals about €2.5 trillion. The bonds sold to seed the fund would be issued in the name of the EU. That means individual members would only be responsible for repaying their own share (to be determined by the European Commission) and not liable for others’ portions.
At least in theory. It’s hard to imagine that Germany (even if it’s not legally bound) would allow the EU to default on the bonds if Italy or Spain couldn’t pay what they owed. The fallout would be too damaging. Such concerns are just one reason German conservatives rejected similar plans in the past. [...]
Unlike the euro crisis, which triggered dramatic turbulence in financial markets but left German industry unscathed, the corona pandemic threatens Germany’s own economic stability. The nations in the eye of the euro crisis storm, such as Portugal and Greece, were not key German trading partners. The countries in focus now — especially Italy — are a different story. [...]
The far-right Alternative for Germany might have had more luck mounting a counterattack if it weren’t consumed by a civil war over some leaders' ties to neo-Nazi elements.
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