Covid crisis : impacts and responses
Covid crisis : impacts and responses
We are experiencing with the Covid-19 pandemic an unprecedented crisis, pushing the global economy into the worst recession since the Great Depression, accelerating economic disparities across the EU and increasing the debt burden in some Member States which was already concerning before the crisis.
Governments, Central Banks and supervisory authorities have responded boldly decisively and imaginatively to limit the consequences of simultaneous sudden stops in spending, economic activity, funding and financial market functioning. There has been unprecedented coordination between monetary, fiscal and prudential policies.
Fiscal deficits and government debt have surged; central bank’ policy rates have fallen further, and their balance sheets have soared. Prudential policy has encouraged banks to partly draw the capital buffers accumulated since the Global Financial Crisis in order to keep credit flowing. So far, this concerted response seems to have worked. Financial markets have stabilized and credit has kept flowing. But the evolution of the pandemic remains uncertain and challenges remain.
At the EU level, EU policymakers reacted swiftly with an array of different policy actions that were designed to help the most affected countries. Finance Ministers decided in April 2020 on a first support package which amounts to 540 billion. A second policy package was agreed in July 2020: the €750 billion “Next Generation EU” recovery fund that will boost the normal EU budget.
Ensuring the implementation and efficient use of unprecedented amounts of money available are essential to help EU countries to rebuild after the COVID-19 pandemic and support investment in the green and digital transitions.
Nevertheless, much remains to be done at the national level to boost investment and growth. Designing and implementing an ambitious reform agenda remains an urgent priority for EU Member States. The period of “free money” will not be permanent and they need to prepare to fiscal consolidation and implement it as soon as economic conditions allow.
Contributions to the policy debate
Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)
Eurofi policy notes
Public and private
V. Dombrovskis - Executive Vice President, European Commission
I. Tinagli - Chair of the Committee on Economic and Monetary Affairs - European Parliament
Villeroy de Galhau - Banque de France | Nadia Calviño - Ministry for Economy and Digitalization, Spain | Klaas Knot - De Nederlandsche Bank & Financial Stability Board | Mário Centeno - Banco de Portugal | Vitorio Grilli - J.P. Morgan | Luigi Federico Signorini - Banca d’Italia
Werner Hoyer - European Investment Bank | Odile Renaud-Basso - European Bank for Reconstruction and Development | Harald Waiglein - Federal Ministry of Finance, Austria | Philippe Heim - La Banque Postale | Alfred Kammer - International Monetary Fund
Gert Jan Koopman - European Commission | Jean Lemierre - BNP Paribas | Emmanuel Moulin - Ministry of the Economy, Finance and the Recovery Plan, France | Harald Waiglein - Federal Ministry of Finance, Austria | Alessandro Rivera - Ministry of Economy and Finance, Italy | Irene Tinagli - European Parliament | Vitorio Grilli - J.P. Morgan | Werner Hoyer - European Investment Bank | Pierre Heilbronn - European Bank for Reconstruction and Development
Rolf Strauch - European Stability Mechanism | Francesco Mazzaferro - ESRB Secretariat | Steven Maijoor - De Nederlandsche Bank | Lorenzo Bini Smaghi - Société Générale | Christian Castro - CaixaBank | Mark Geisler - Bank of China (Luxembourg) S.A.
J. de Larosière - Former President, Eurofi
Klaus Regling - European Stability Mechanism | Andrej Sircelj - Ministry of Finance, Slovenia | Werner Hoyer - European Investment Bank | Pablo Hernández de Cos - Banco de España
Harald Waiglein - Federal Ministry of Finance, Austria | Emmanuel Moulin - Ministry of the Economy, Finance and the Recovery Plan, France | Jörg Kukies - Federal Ministry of Finance, Germany | Gert-Jan Koopman - European Commission | Irene Tinagli - European Parliament | Ricardo Mourinho Felix - European Investment Bank | Vittorio Grilli - J.P. Morgan
Markus Ferber - European Parliament | Declan Costello - European Commission | Boris Vujčić - Croatian National Bank | Mārtiņš Kazāks - Bank of Latvia | Pierre Heilbronn - European Bank for Reconstruction and Development | Laurent Zylberberg - Caisse des Dépôts | Sylvain Broyer - S&P Global Ratings Europe Ltd. | Cyril Roux - Groupama
O. Scholz - Federal Minister of Finance and Vice Chancellor, Germany