Friday, 26 February 2021 19:22

Corona and Financial Stability 4.0: Implementing a European Pandemic Equity Fund

Written by
Rate this item
(0 votes)

Boot, A, Carletti E, Kotz H-H, Krahnen J P, Pelizzon L, Subrahmanyam M 

Additional Info

  • Published in: A. Bénassy-Quéré and B. Weder, Europe in the Time of Covid-19, di Mauro (Eds)
  • Year: 2020
  • Abstract: This Policy Letter presents a proposal for designing a program of government assistance for firms hurt by the Coronavirus crisis in the European Union (EU). In our recent Policy Letter 81, we introduced a new, equity-type instrument, a cash-against-tax surcharge scheme, bundled across firms and countries in a European Pandemic Equity Fund (EPEF). The present Policy Letter 84 focuses on the principles and conditions relevant for the operationalization of a EPEF. Our proposal has several desirable features. It: a) offers better risk sharing opportunities, augmenting the resilience of businesses and EU economies; b) is need-based, thereby contributing to an effective use of resources; c) builds on conditions and credible controls, addressing adverse selection and moral hazard; d) is accessible to smaller and medium-sized firms, the backbone of Europe’s economy; e) applies Europewide uniform eligibility criteria, strengthening support among member states; f) is a scheme of limited duration, reducing (perceived) government interference in businesses; g) creates a template for a growth-oriented public policy, aligning public and private sector interests; and h) builds on the existing institutional infrastructure and requires minimal legislative adjustments.
Read 605 times
Loriana Pelizzon

Professor in Finance, Università Ca' Foscari Venezia & Goethe Universität Frankfurt am Main

Promoting partner, Scientific Committees and Director of the Area Financial Risk