ECB’s Lagarde cheers Franco-German EU recovery fund plan

A Franco-German proposal for a 500 billion euro ($546 billion) coronavirus recovery fund would bring essential relief to the bloc’s worst-hit nations and demonstrate solidarity, European Central Bank President Christine Lagarde said on Monday.

Closing in on a deal after two months of often bitter talks, the European Union’s biggest powers proposed a fund on Monday that would offer non-repayable grants to EU regions and sectors hit hardest by the pandemic, with the cash borrowed by the bloc as a whole rather than by individual member states.

Although the plan still requires the consent of all EU members, it would be a big step towards debt mutualisation, once a taboo for German governments fearing that their taxpayers might be liable for the fiscal irresponsibility of others.

“The Franco-German proposals are ambitious, targeted and, of course, welcome,” Lagarde said in a joint interview with four European newspapers, after announcement of the plan sent the euro higher and reduced Italian bond yields.