Extraordinary times require extraordinary measures. The case for a new toolbox in the COVID-19 European Union


The epidemiological COVID-19 crisis is probably the hardest challenge the European Union has ever faced since its foundation, proving to be an even harder threat than the 2009 European debt crisis. With special attention to the Italian context, the first part of this paper will cover the increasing criticality of the European Union and of its crisis management toolbox. In particular emphasis will be placed on the instrument of the European Stability Mechanism, which has been for a long time one of the protagonists of the Italian political-economic debate. Concerning the ESM, the tool was born with different purposes, and its application to the COVID-19 crisis would not prove only insufficient but also the wrong medicine for the disease at hand, notwithstanding the potential usefulness of the tool to deal with minor debt crises. After a brief interlude on Eurobonds, not least because of the speed with which they disappeared from the political debate, the analysis of the ESM in all its aspects, including the reform project, will be resumed. Below we will analyse the ECB’s OMTs instrument with a brief overview of the German Constitutional Court ruling of 5 May 2020’s consequences on the economic governance of the crisis. Consequently, an attempt will be made to lay down the possible outcomes of the current political stalemate. The underlying idea will be that the strategy of the fait accompli, political optimism and consensus laid down an institutional framework unfit to deal with the extraordinary and suited only to deal with ordinary business. Finally, the issue of debt monetisation will be addressed with potential perspectives and suggestions on the governance of the euro area.


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