ROME – The European Union should consider creating a sinking fund to manage public debt accumulated by member states during the COVID-19 pandemic in the last two years, European Central Bank governing council member Ignazio Visco said on Thursday.
“The pandemic showed the limits of the current European Union without a common budgetary capacity,” the Bank of Italy governor said at an annual ‘World Savings Day’ event.
Visco said that after the crisis Italy should speed up the reduction of its public debt burden to avoid future risk of instability.
“If the economy continues to perform better than expected, it will be important to take advantage of this to reduce the deficit,” he said.
He also said supply bottlenecks were starting to affect Italy and warned that the impact could weigh on prices and production for longer than expected.
He added that bank deposits held by households and businesses had increased by 200 billion euros ($232.80 billion) during the pandemic, but said this cash mountain would decline as consumption recovered.
($1 = 0.8591 euros)
(Reporting by Stefano Bernabei and Angelo Amante; Editing by Crispian Balmer)