The case for corona bonds

Eleven legal experts from different European countries argue in favour of European bonds to help with economic recovery

The coronavirus pandemic is likely to lead to a significant recession throughout Europe, with all countries spending more money than they can generate. In this situation, the subject of Eurobonds is being discussed again: joint debt instruments backed by eurozone governments. A group of law professors from five European countries have now drafted a proposal on how to design such bonds to ensure that all EU members could benefit.

How can Europe address the coming recession triggered by the safety measures to protect against Covid-19? Eleven legal experts from Slovenia, Italy, the UK, France, and Germany have now presented a response to this question. Their proposal is published by Matthias Goldmann, Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law in Heidelberg and Junior Professor at Goethe University, Frankfurt am Main.


The team is making the case for eurobonds, so-called "corona bonds", in the amount of one trillion euros to finance the consequences of the crisis. "This is not just an act of charity for the weaker", the eleven experts emphasise in their paper, "but a way of protecting the common European project against a challenge that affects all through fault of none. The purpose is to ensure that Europe as a whole emerges from this unexpected crisis stronger and readier to meet the many other challenges which have been temporarily been put on the back burner, but which remain unresolved."


Their proposal stipulates that one part of the funds generated should be used for joint European projects in which all member states are involved. Examples of these include, in the area of health, better prevention of another potential pandemic, in the area of digitization, the improvement of the digital infrastructure in Europe and, in the area of migration, joint accommodation and provisioning for migrants. Possible further areas could include financing strictly independently public TV and radio networks and investment to aid climate protection, such as in a European railway network.

The other part of the finance volume is to be available to individual member states; the legal scientists state that the member states should agree a joint framework for this. This could mean, for example, spending on hospital infrastructure in individual countries, investments in re-industrialization strategies as well as protection funds for small businesses and for important infrastructure such as airports and airlines.


Moreover, the team around Matthias Goldmann suggests that every member state should pay back its portion of capital and interest for the corona bonds in accordance with the key for the contributions to the EU budget. In addition, the EU could raise its own taxes, for example, on financial transactions or air traffic, which would be used specifically to service debts from this bonds. As a legal basis for its suggestions, the team suggests a separate corona bond treaty open to all EU member states willing to accept the targets, procedures and values set out therein.


The legal experts further point out that many details still need to be clarified. Nevertheless, they view their suggestion as a pragmatic way to facilitate the choice European heads of state and government now have to make: to either "retreat along ill-perceived national lines" or "to finally show some resolve and to unite in the midst of a divided world."



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