France, Germany propose $545 billion EU rescue fund

As the coronavirus pandemic has shattered world economies, European countries are working on new ways to counter the economic crisis.

Europe's largest economies Germany and France have proposed a $545 billion recovery fund that would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic.

Add WION as a Preferred Source

The fund will boost the efforts to create a co-ordinated European fiscal response to the coronavirus pandemic. The funds would be raised by the European Commission through borrowing on capital markets.

The fund would be an additional top-up to the 2021-2027 EU budget. The grants should be paid back over a long time and Germany would shoulder roughly 27% of the funds. But there will be some conditions attached to these grants from the recovery fund.

The grants will be based on a clear commitment from member states to follow sound economic policies and an ambitious reform agenda. The European Commission is to present its proposal for a recovery fund linked to the EU's next long-term budget on May 27.

But the proposal could face opposition from some of the frugal northern countries of the 27-nation bloc, like the Netherlands, Finland and Austria.

The announcement of the proposal pushed up the Euro against other global currencies and brought down Italian bond yields as well.