Very pleased to see this piece by @adam_tooze in support for coronabonds and a coalition of the willing and his explanation for why the @ESM_Press is inadequate in the current context. https://www.ips-journal.eu/regions/europe/article/show/coronabonds-and-europes-north-south-divide-4256/ https://twitter.com/adam_tooze/status/1250154899402301440

but the @ESM_Press is not only inadequate on political grounds because as "a legacy institution of the eurozone crisis, it is political poison", it is also technically a hammer that is looking for nails.

The eurogroup has only developped instruments that are useful to respond to a rise in sovereign spreads and a loss of market access by Member State (ESM and SURE), a problem we don't have because the shock is symmetrical for now and thanks to the @ecb's PSPP/PEPP.

None of which respond to the need for common action and broad fiscal expansion. As a result, fiscal expansion will only be national, and northern Member States will soon try to limit the unlimited mutualisation that is taking place via the ECB thereby creating rise in spreads.

the next battle over PSPP/PEPP extension/expansion will be central, it will be used by northern european countries to re-assert the logic of controlled and limited solidarity (what Trichet called federalism by exception) rather than unlimited national support by way of the ECB.

In the absence of common bonds and mutual fiscal response, this tension has the potential to revive the euro crisis and if it does, we will have to trace it back to this fateful eurogroup that agreed to the ESM as a hammer looking for nails in response to the corona crisis.