After a long struggle, the EU members decide to take on debts together in the corona crisis. Bundesbank President Weidmann is not positive about this – and calls for a control mechanism to check the use of the funds.
Bundesbank President Jens Weidmann has criticized key decisions of the EU special summit on corona reconstruction aid. "In principle, I consider joint debt for extensive transfers to be questionable," Weidmann told the newspapers of the Funke media group. The package should "not serve as a springboard for large-scale EU debt for regular household financing," he warned. The Bundesbank president called for a control mechanism "so that the funds are used sensibly and efficiently".
In principle, however, it was important that the EU proved to be able to act in the crisis: "Solidarity in Europe – also financial – I think is right in this situation," Weidmann emphasized. The head of the central bank asked politicians to limit corona aid to a time limit. "It is important that relief measures are limited," he said in the interview. "Then they automatically expire in the further course and the public finances stabilize again."
The state holdings in companies also apply: "They may be necessary now, but the state should withdraw quickly after the crisis. The state is not the better entrepreneur." Politicians also have the task of "regularly checking short-time work benefits," said Weidmann. It makes sense to use this instrument to bridge a temporary economic downturn. "The short-time work allowance should not, however, solidify structures that have no future, such as when business models are outdated."
Concern about the situation of the United States
The EU summit had agreed on a € 750 billion aid package in negotiations lasting several days. Of this, 390 billion euros are to go to the recipient countries as non-repayable grants, the rest are to be granted as loans. To finance the package, the EU Commission is taking on unprecedented levels of debt on the financial markets. They are to be repaid by 2058.
The central bank chief expressed concern about the pandemic development in the USA. "The United States loosened some of its measures early on and is now tightening them up again in some places," he said. "This stop-and-go is certainly difficult for the economy." The development in the USA shows "how important it is to remain vigilant, to closely monitor the infection process and to prevent a flare-up".
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