Financial Market Experts Largely Reject Corona Bonds


Survey in the ZEW Financial Market Report

Compared to corona-bonds and other instruments, ESM loans receive the most approval from the ZEW financial market experts surveyed.

Corona bonds are not particularly popular with financial market experts. By contrast, loans from the European Stability Mechanism (ESM) and additional financial aid from the EU budget are considered to be more sensible solutions to ensure economic stability in the eurozone in view of the looming recession triggered by the coronavirus pandemic. This is the result of a special question included in the latest ZEW Financial Market Survey among 203 financial market experts. The survey was conducted by ZEW Mannheim in April 2020.

Only 15.8 per cent of the survey participants view the so-called corona bonds favoured by Italy and several other southern European countries as an appropriate instrument for stabilising the economies of the affected euro countries. Most of the respondents (61.1 per cent) are in favour of ESM loans, which are generally linked to conditions for the borrower countries. 55.7 per cent of the financial market experts consider additional aid from the EU budget as a suitable instrument to counter the crisis.

“The financial market experts consider both the ESM as an instrument for stabilising public finances and financial aid from the EU budget as a solidarity instrument to be appropriate measures. Corona bonds, which blend stability and solidarity, are not considered suitable,” says ZEW President Professor Achim Wambach.

The interviewed ZEW financial experts support the measures taken so far to reduce the economic consequences of the coronavirus crisis.

The survey participants generally welcome the economic aid measures adopted by the German Government so far. 38.8 per cent of those surveyed rate the aid package adopted in Germany as very positive, and 95.8 per cent at least see a positive effect on the economy. Similarly good, but somewhat less euphoric, is the experts’ assessment of the aid package passed by the US government. The survey participants’ evaluation of the monetary policy measures taken so far by the ECB and the US Federal Reserve has also been almost entirely positive. 

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