Europe to set to ease fiscal rules, Germany may issue new debt

Europe appeared to up the ante on the fiscal front towards the end of the week.

Speaking at a news conference in Berlin, German finance minister, Olaf Scholz, said the country would open the government spending taps to offset the impact of the coronavirus crisis and that the country may need to issue new debt in order to finance the increase in spending.

The possibility of issuing new debt is typically taboo in Germany.

"We have the financial strength to deal with this crisis," Scholz said.

"There is enough money there and we are deploying it. We are using all necessary measures to protect workers and companies."

In response, as of 1442 GMT, the yield on the benchmark 10-yaer German bund was 15 basis points higher at -0.59%.

Meanwhile, the European Commission committed to maximum flexibility in the interpretation of the bloc's rules governing fiscal spending and state aid so that countries can aid businesses and workers.

That may extend to liquidity injections for the worst hit firms, including the airline and tourism sectors.