Many investors have never been so confident on Europe


Klaus Regling, head of the European Stability Mechanism, at Forum The European House – Ambrosetti in September, 2020.

Michael Green | CNBC

Europe’s unprecedented stimulus plan has changed how many investors look at the region, the head of the euro zone’s crisis fund told CNBC Saturday.

Investors have often criticized Europe for its lack of coordination and weak institutions, especially since the sovereign debt crisis shook the bloc.

However, according to Klaus Regling, the head of the European Stability Mechanism — a crisis fund set up in 2012 — there’s a different opinion in the market now, after the European Union agreed to jointly raise funds to address the coronavirus crisis.

“Many people in the markets tell me: ‘We are more positive on Europe than the last 10 years  — ever,’ because of the quick reaction, the big volume of money and the good coordination,” Regling told CNBC’s Steve Sedgwick at the European House Ambrosetti Forum.

In May — about two months since strict lockdowns were imposed across Europe — the EU announced its first stimulus measures to support nations dealing with the economic shocks from the virus.

This was then escalated in July, when the 27 countries of the EU announced they would be raising 750 billion euros ($888 billion) in public markets to invest across the region. The plan still has some legislative hurdles to overcome, but it marks the first time that the group of nations has agreed to issue such a vast amount of common debt.

Markets welcomed the move, with some calling it Europe’s “Hamiltonian moment,” in reference to the deal struck by U.S. Founding Father Alexander Hamilton to convert previous debts into joint obligations of the federal union.

Some believe the deal opens the precedent for common debt issuances in future crises.

Speaking to CNBC, Regling also noted that the global response to the crisis had lacked coordination in comparison with the 2008 global financial crisis.

“But of course we know why it’s so different this time,” he said, citing that “the United States has moved away from multilateralism” and the “big conflict between China and the U.S.” 



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