ESM, not Eurobonds is the mechanism to share burden – German finance minister

© Reuters. Finance Minister Olaf Scholz addresses the media during the coronavirus disease (COVID-19) outbreak

BERLIN (Reuters) – The European Stability Mechanism (ESM) is the right instrument to share the economic burden of the coronavirus crisis, German finance minister Olaf Scholz said on Sunday, reiterating that jointly issued debt by euro zone members was not the right way to counter the impact of the pandemic.

“The proposal that we are now discussing very concretely is to activate the European Stability Mechanism, which would make it possible to mobilise a lot of money”, he said.

Italian Prime Minister Giuseppe Conte has called for special “coronavirus bonds” to help EU states finance health spending and economic rescue programmes. European Central Bank chief Christine Lagarde asked euro zone finance ministers to seriously consider a one-off joint debt issue of “coronabonds.

But Germany and other Northern countries such as the Netherlands have rebuffed the idea of issuing eurobonds.

“We are — in addition to securing funds from the European budget and the European Investment Bank — working on making sure that the (individual) countries are able to cope with the difficult tasks and the additional loans they take out”, Scholz said, adding that a separate project will be needed to animate the European economy once the crisis has been overcome.

“Solidarity must mean that we cling together financially”, he said.

Separately, he said that German employees will be able to receive a tax break on bonuses of up to 1500 euros, to reward hard-working people especially in the healthcare and retail sectors.

“In the future, it will be crucial that better wages are paid (in these sectors)”, he said. According to a report in weekly Bild am Sonntag Scholz has called for the minimum wage in Germany to be hiked to 12 euros from 9.35 euros per hour.

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