From UPSC perspective, the following things are important :
Prelims level : Coronabonds, Eurozone
Mains level : Not Much
The coronavirus pandemic has revived the acrimonious debate between euro zone countries about jointly issuing debt through instruments called Coronabonds.
- Coronabonds are proposed debt instruments amongst EU member states, with the aim of providing financial relief to Eurozone countries battered by the coronavirus.
- They aim to meet healthcare needs and address the deep economic downturn that is set to follow.
- The funds would be mutualised and supplied by the European Investment Bank, with the debt taken collectively by all member states of the European Union.
- The euro zone jointly issues debt through its bailout fund, the European Stability Mechanism, which borrows on the market against the security of its paid-in and callable capital provided by euro zone governments.
What is Eurozone?
- The Eurozone officially called the euro area is a monetary union of 19 of the 27 European Union (EU) member states which have adopted the euro as their common currency and sole legal tender.
- The monetary authority of the Eurozone is the Eurosystem.
- It consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.