More from Lane: - Q) The EU is currently........>

ECB: More from Lane:

- Q) The EU is currently discussing what form the recovery fund should take to

avoid a depression. If the agreement is ultimately based more on loans than on

transfers, will it help to pull heavily indebted countries like Spain and Italy

out of the slump? What ratio of loans to transfers would be sustainable?

- A) Rather than focus on the question of transfers or loans, I think it is

useful to look at this more in terms of the following question: what should be

financed at European level and what at national level? One of the proposals

under discussion is to increase the EU's budget and have the European Commission

distribute the funds. One advantage of this proposal is that it would not entail

an increase in national public debt, and keeping the cost of debt low will help

governments tackle the pandemic and support the recovery. Instruments like the

Commission's SURE programme, the European Stability Mechanism (ESM) or the

European Investment Bank also make an important contribution in this respect.