Market news

11 June 2020

Euro zone searches for a new chief as it fights over plans for new fiscal stimulus

CNBC reports that the 19 finance ministers of the euro area are looking for a new president, at a time when the region is facing tough negotiations over a 750 billion euro ($851 billion) fiscal plan to help it recover from the coronavirus crisis. 

The Eurogroup, which brings together the finance chiefs of countries that share the euro, will welcome applications from Thursday afternoon in a process that’s due to be concluded by July 9.

It comes after Mario Centeno, the current Eurogroup president, resigned from the Portuguese government, where he had served as a finance minister since October 2015. Being a sitting finance minister is a precondition to serve as Eurogroup chief.

Even before the official process begins, there are three names being mentioned as potential candidates: Spain’s finance minister Nadia Calvino, Luxembourg’s finance chief Pierre Gramegna and, from Ireland, Paschal Donohoe.

Irrespective of who applies for the job, the decision comes at time of division within the region.

Some European countries are pushing for a bold and unprecedented fiscal stimulus, whereas other, more fiscally-conservative countries, are wary of taking on too much risk.

This split is evident in ongoing discussions about a 750 billion euro plan to prop up the wider European Union amid the Covid-19 pandemic.

The European Commission, the executive arm of the EU, proposed last month that the amount should be raised in financial markets and distributed to member states, so they can deal with the economic shock from the crisis. It plans to disburse 500 billion euros as grants and 250 billion euros as loans.

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