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Avoiding the Japanification of Europe

The COVID-19 crisis has upended many existing European Union rules and institutional guidelines. If EU leaders take this as an opportunity to pursue radical, forward-looking change, the COVID-19 upheaval could move the bloc to a better place.

BOLOGNA – As monetary and fiscal authorities have acted aggressively to blunt the COVID-19 pandemic’s economic impact, public debt and central-bank balance sheets have swelled rapidly. In the European Union, this trend is compounded by a new €750 billion ($886 billion) COVID-19 recovery fund, which includes the issuance of so-called “recovery bonds” guaranteed by the EU’s multiyear budget and, possibly, by Europe-wide taxation.