The European Union's two largest economies, France and Germany, have proposed a 500-billion-euro ($545 billion) injection of financial aid for member nations hardest hit by the novel coronavirus.

President Emmanuel Macron of France and Chancellor Angela Merkel of Germany put the offer on the table on Monday during talks about a European recovery fund for nations, including Italy and Spain, that are struggling financially because of the virus and the COVID-19 respiratory disease it causes.

Importantly, Macron and Merkel said the money should be offered in the form of grants, not loans.

The Franco-German proposal would see the EU borrow money on the financial markets before distributing it to nations that need it the most. The debt would be shared by all member nations in proportion to their size and prosperity, which means the taxpayers of France and Germany would pick up the lion's share.

The offer was more generous than earlier proposals and could be enough to ensure the bloc avoids a major rift between richer nations in the north and poorer nations in the south.

Macron said it is "what the eurozone needs to remain united".

"I believe this is a very deep transformation and that's what the European Union and the single market needed to remain coherent," the BBC quoted him as saying.

The Guardian reported Merkel as saying: "We are convinced that it is not only fair but also necessary to now make available the funds."

She had previously appeared to bristle at the notion of nations such as hers having to share the financial pain of countries that have been more seriously impacted by the virus. Experts said many northern nations resented the idea of bailing out southern nations that they perceived as having hit hard times, in part, because of reckless spending in the past that left them unprepared for a disaster.

Many northern nations had favored offering loans that would need to be paid back.

The Guardian newspaper said the latest offer is "a significant move towards a level of burden-sharing and fiscal transfers firmly opposed during past crises".

Italy and Spain had previously hinted that a failure on the part of the EU to offer meaningful help could trigger a further erosion of the bloc, which lost the United Kingdom as a member earlier this year.

European Commission President Ursula von der Leyen said the offer was an acknowledgement of the "scope and the size" of the economic challenge that Europe is facing. And Christine Lagarde, president of the European Central Bank, said it was "ambitious, targeted and welcome".

All 27 member nations will get to vote on the idea.

Austria, Denmark, Finland, the Netherlands, and Sweden are all understood to be lukewarm at best about the idea and may still favor offering a loan.