German-French alternative to Euro-Bonds

What's behind Merkel and Macron's 500 billion-dollar proposal. Our update on the reconstruction plans for Germany and Europe.




19. MAY 2020



It is well known that the EU works best when Germany and France pull together. With the new proposal for a 500 billion euro recovery fund, Berlin and Paris are sending a positive signal to the EU countries in crisis. Now it’s time to convince the other EU 27 countries of the proposal. On Tuesday the finance ministers of the countries will already discuss the details of the proposal. Especially the Netherlands, Austria and Sweden will have to be convinced.

Nevertheless, the experts seem to agree that this could be a crucial moment for the EU.

Lucas Guttenberg (Jacques Delors Centre) is enthusiastic about the simplicity of the proposal, but wonders to what extent it is possible to ensure that the money gets to the right places.

The New York Times meanwhile speaks of a “Major Step” for European cohesion and notes positively that Merkel breaks the German taboo of common European debts and thus leaves German economic orthodoxy behind:

New York Times: Merkel, Breaking German ‘Taboo,’ Backs Shared E.U. Debt to Tackle Virus

But not everybody is as enthusiastic about the new proposal. In a recent twitter thread Sony Kapoor relativizes the historical magnitude of the proposal.


Here you can find the press release on the joint proposal of the Federal Government and a first assessment by the Financial Times:

Press release of the German Government

Financial Times: Germany and France unite in call for €500bn Europe recovery fund



The euro was planned during a period in which economic policy making was driven by a deep belief in market liberalism and the near impossibility of systemic financial crises. This belief has been brought into question since the euro crisis, which showed that panics do happen. New thinking needs to focus on developing mechanisms to protect eurozone countries from such panics and to foster economic convergence between members.