European leaders sit down for the fourth consecutive day on Monday to continue tense negotiations on a proposed 750 billion-euro rescue fund.
EU rescue talks
The European Commission, the EU’s executive arm, proposed assistance to back economies and markets in May to alleviate the economic shock caused by the coronavirus. However, European capitals are deeply divided on how much of the aid funds should be grants and how much should be loans.
The governments of the Netherlands, Austria, Sweden, and Denmark, the so-called Frugal Four, have so fiercely objected to the proposal over how the bailout plan is linked to the democratic values of the EU and how the money is invested.
Dutch Prime Minister Mark Rutte said on Monday morning that some progress has been made in the talks so far. His Austrian counterpart Sebastian Kurz wrote on Twitter that he was “happy” with the series of meetings that lasted until late at night on Sunday.
Positive signs from the two rebel voices were effective in the euro’s climb to the highest level since March 9 against the US dollar (EURUSD): 1.1467.
President of the Council of Europe Charles Michel, who chaired the negotiations between the 27 country leaders, will make a new proposal on the recovery fund and the EU budget on Monday afternoon. If the proposals are well received by 27 governments, they will soon be approved. On the other hand, if the proposal creates more tension, the negotiations will be postponed to a later date.
The biggest obstacle to the agreement is the distribution of 750 billion euros in grants and loans.
After the USA, the UK’s relations with the People’s Republic of China are also straining.
Expressing his country’s concerns about the new national security laws imposed by China on the former British colony of Hong Kong, Prime Minister Boris Johnson announced that the London government will amend agreements for the extradition of criminals with China and Hong Kong.
Johnson said that he didn’t want to be automatically pushed into an anti-Chinese position, but that London had serious concerns about grave human rights abuses, such as what is happening to the Uighurs in Xinjiang what happened in Hong Kong.
US Secretary of State Mike Pompeo is visiting London today for a two-day trip. The two countries lead the removal of the Chinese Huawei communications company from the Western markets, accusing it of spying for the Chinese Communist Party.
China’s Ambassador to London has warned the British for taking sides with Washington on trade, technology, and the CCP’s severe human rights violations, threatening with retaliation.
In a decision on Monday, the People’s Bank of China (PBoC) left its 5-year loan interest rate at 4.65%, the 1-year loan interest rate at 3.85%, in line with market expectations.
Regarding Covid-19, Guo Kai, deputy director of the PBoC monetary policy department who made statements earlier Friday, said there was little need for more emergency measures.
“We have to admit that lower interest rates don’t necessarily mean better,” Guo said.
US stimulus talks
Congress Republicans in the US are intensifying talks with the Trump administration for a new trillion-dollar stimulus package that they plan to submit to lawmakers’ review this week.
The Republicans’ two Congressional leaders, House of Representatives Minority Leader Kevin McCarthy and Senate Majority Leader Mitch McConnell are set to discuss the new package with President Donal Trump and Treasury Minister Mnuchin at the White House today.
Democrats who control the House of Representatives that has the final say over the purse as per the Constitution, are pushing for a larger, approximately $3 trillion aid package. Democrats want more money for states worst hit by the Covid19 and local governments, while Trump and Republicans favor a smaller package that includes tax cuts.