I have seen tweets sent from Italy, criticising the ESM and quoting me. I want to recall the whole gist of what I have written. The ESM was crucial in the 2010-2012 crisis when several countries lost access to the financial markets and had very high yields 1/n

The ESM provided then long-term loans. Conditionality was controversial and too harsh in a few cases. Now the situation is different. Countries have access to markets and yields are on the low side. In this context, 2 years ESM loans are not very attractive.2/n

They also imply stigma and signal weakness to markets. Common debt issuance continues to be necessary, with the obtained resources being used by all countries. It would also be an important sign of solidarity in confronting a common shock 3/5

I have suggested to have the Commission issuing long term debt to provide the resources for a Fund that would manage transfers to cover certain member countries’ expenditures (see my blog at

https://macroviews.net/wp/wp-content/uploads/2020/04/VC-The-European-response-to-the-coronavirus-crisis.docx

However, if common issuance, in whatever form, is rejected, then the ESM becomes useful and necessary, for long maturities and with revised conditionality. The general demonisation of using ESM loans must be avoided. Some countries may found later on that they need them. 5/5