Home Forex News The EU Might Receive A Boost If The Eurozone Finance Ministers Approve...

The EU Might Receive A Boost If The Eurozone Finance Ministers Approve ESM Use

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Eurozone finance ministers were scheduled to hold a meeting this week to decide whether to use the Emergency Stability Mechanism (ESM) to aid the Euro amid the ongoing global crisis caused by the coronavirus.

The ESM was formed after the European debt crisis of 2012, which happened due to the 2008 financial crisis, thus weakening the Euro to the brink of collapse. The ESM has an emergency fund of 400 billion euros, which is set aside for a rainy day. From the looks of things, that rainy day may finally be here, and it warrants the use of the fund to shield the Euro from the economic fallout caused by the COVID-19 pandemic.

The Euro might benefit from the decision to use the ESM

The decision to use the ESM might offer huge support to the Euro. The ESM has various tools that are supposed to be used to help achieve economic recovery when the economy is going through a crisis. The tools are also supposed to help restore investor confidence. Some of those tools include facilitating credit in distressed EU countries and through the purchase of sovereign debt.

Some of these measures will help boost the Euro’s strength since investor confidence in the currency will be restored. This means that investors will buy the Euro, thus potentially fueling a bull run. This is why investors and market experts are currently keen on observing the outcomes of the meetings by the Eurozone ministers.

The Eurozone finance ministers meeting comes on the heels of ECB push

The meeting y the EU finance ministers also coincides with the European Central Bank’s call on EU leaders to act quickly to soften the negative economic impact of the COVID-19 pandemic. Christine Lagarde, the current ECB chief, has particularly been vocal about the need for immediate and carefully thought-out action on measures designed to support the economies of EU member countries. Lagarde believes that the EU is not reacting fast enough to the threat on the economy.

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