EU Seals Deal on 750 billion Euro Recovery Fund

The leaders of the European Union have recently reached a deal on a massive stimulus plan for the coronavirus-affected economies within the bloc. The decision could be finalized after four days of intense debate and discussion in a meeting attended by all the major leaders of the European Union.

The deal is an attempt to ensure that the future of the EU does not become uncertain because of the pandemic.

Background

The European Union was already reeling under the pressure of relinquishment of the United Kingdom from the group and then the COVID 19 pandemic hurt the bloc hard. That is the main reason the EU was very slow in coordinating its initial response but now it hopes that a united front on the economic aid would definitely give the message that EU can sail through a crisis by staying united.

Though the EU nations have done a better job in containing the COVID 19 spread in the respective countries, as compared to the United States, the economic recovery seemed very difficult. Italy and Spain also were affected badly in the first few months of the pandemic but the EU nations then collaborated on medical, travel and economic fronts. The European Central Bank also pumped in liquidity into the system in order to keep the economy going during these tough times.

Highlights

The deal, reached after a long discussion, is going to benefit Poland the most since it will receive tens of billions of euros in grants and cheap loans to tide it over the crisis. Apart from that, the high-debt Mediterranean-rim countries will also be benefitted immensely by the recovery fund announced by the EU. The disbursements under this deal will be linked to governments maintaining the rule of law in their respective countries.

European Central Bank

It is the central bank for the Euro and regulates the monetary policy within the Eurozone, comprising of 19 members states of the European Union. Eurozone is also one of the largest monetary areas in the world. ECB was set up as per the Treaty of Amsterdam and it is one of the seven institutions of the EU. The capital stock of the bank is owned by all 27 central banks of each of the EU member states. It is headquartered in Frankfurt, Germany.

Month: Current Affairs - July, 2020