EU Unveils New 750bn Euro COVID-19 Recovery Plan
The European Union has unveiled plans to raise 750 billion euro ($827 billion) for its members to finance their recovery from the COVID-19 economic collapse. [CNBC]
With this plan, Europe has now become the latest region to raise debt to aid in economic recovery. It follows in the footsteps of countries such as Japan, which issued a $2.2 trillion package, and the United States, which passed a $2.3 trillion recovery package.
The EU will distribute the kitty in two phases. In the first, it will apportion €500 billion in grants to the countries based on how severe the pandemic has been. Italy and Spain, being the worst-hit countries, will get the largest share. The EU will avail the rest of the money in loans to deserving countries for repayment between 2028 and 2058.
Green Energy and Digitization Take Priority
Of the €500 billion, €310 will go towards green energy and digital transition projects. This is the EU’s way of investing in the future of the region, the President of the European Commission Ursula von der Leyen believes. She told Euronews:
Yes, we have to raise money now and invest it, but we will invest it the European priorities that are so important for you. […] If they have to pay back partly that money, at least they should harvest and reap the benefits of these investments
The new stimulus package comes barely two months after the EU approved a €540 billion stimulus package. This package allowed the member states to make unconditional use of €240 billion, with €100 billion going to a short-term work program. As BeInCrypto reported, Spain and Italy pleaded for additional funds to aid in recovery, but other member states shot them down.
Another Bitcoin Endorsement
The implications will be immense if the 27 member states approve the plan. For one, it will give the EU the ability to raise taxes directly, much like a federal government. As The New York Times reports, member states that refuse to grant it this power will see the EU deny them funding for their projects in the future.
The biggest effect, however, will be on the value of the euro. And while this is most likely going to result in inflation in Europe and beyond, it has further raised Bitcoin’s profile as a store of value. While the U.S Fed, the Bank of Japan, and now the EU have all moved to expand their currency supply at will in recent months, Bitcoin’s supply has remained steady, proving that it’s the only stable store of value.
BitMEX Research captured it best in its report stating,
In our view, in this changed economic regime, where the economy and financial markets are set loose, with no significant anchor at all, not even inflation targeting, it could be the biggest opportunity Bitcoin has seen, in its short lifetime.