Germany endorses EU loans to mitigate energy crisis

On Monday, Germany greed to support joint EU debt in order to encounter the continent’s energy crisis. Last Tuesday, European Economic Commissioner Paolo Gentiloni and Internal Market Commissioner Thierry Breton called for joint borrowing to finance the necessary response to the energy crisis in the Eurozone.

German Finance Minister Christian Lindner, however, argued that a joint debt would not be the answer to the current crisis, which was very different from the one caused by the coronavirus pandemic.

With the initial reaction, EUR/USD pair jumped above 0.9740 before quickly retreating to around the 0.968 level.

Germany’s Chancellor Olaf Scholz will reverse a unwavering German stance and now supports joint issuance of European Union debt to ease the blow of the energy crisis as long as the freshly raised money is disbursed to struggling member states as loans, not grants.