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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)

Public and private
sector views

Public authority views

D. Costello - DG for Economic and Financial Affairs, European Commission - Next Generation EU: A pillar of the recovery - April 2021

M. Ferber - Committee on Economic and Monetary Affairs, European Parliament - Setting the right incentives for private investments - April 2021

P. Hernández de Cos - Basel Committee on Banking Supervision (BCBS) - Securing a robust recovery: how can banks be part of the solution? - April 2021

W. Hoyer - European Investment Bank (EIB) - Recovery and cohesion through green and digital transformation - April 2021

G-J. Koopman - DG Budget, European Commission - Making the recovery work: NextGenerationEU as a game changer on the capital markets - April 2021

J. Kukies - Federal Ministry of Finance, Germany - NGEU and RRF – Implementation will be key - April 2021

E. Moulin - Ministry of the Economy, Finance and the Recovery Plan, France - Delivering on the EU recovery fund - April 2021

R. Mourinho Felix - European Investment Bank (EIB) - Challenges and Opportunities of the new Recovery and Resilience Facility - April 2021

K. Regling - European Stability Mechanism (ESM) - Post-pandemic fiscal priorities for the euro area - April 2021

A. Šircelj - Minister of Finance, Slovenia - Post COVID-19 Recovery Plan for Europe - April 2021

I. Tinagli - Committee on Economic and Monetary Affairs, European Parliament - Three challenges for the implementation of Next Generation EU - April 2021

H. Wainglein - Federal Ministry of Finance, Austria - RRF will address structural reform needs, but key problems remain unresolved - April 2021

V. Dombrovskis - European Commission - A stronger Europe post COVID-19: economic and financial policy aspects - September 2020

J. Fernández Álvarez - European Parliament - Paving the final way for a historic EU response to the COVID-19 crisis - September 2020

R. Gualteri - Minister of Economy and Finance, Italy - An opportunity Europe must not miss - September 2020

P. Heilbronn - European Bank for Reconstruction and Development (EBRD) - We are all in this together - September 2020

J. Kukies - Federal Ministry of Finance, Germany - Enabling the financial sector to contribute to the economic recovery in Europe - September 2020

M. Nava - European Commission - Technical Support, DG REFORM and the recovery and resilience of EU Member States - September 2020

C. Noyer - Banque de France - Public debts held by central banks: what are the consequences? - September 2020

O. Renaud-Basso - French Ministry of Economy and Finance - The European recovery plan to pave the way to a stronger, more sovereign and independent Europe - September 2020

O. Scholz - German Minister of Finance - Together for Europe’s recovery - September 2020

R. Strauch - European Stability Mechanism (ESM) - Addressing post-Covid invesment needs - September 2020

I. Tinagli - European Parliament - The Recovery Package and the new priorities for the European Union - September 2020

T. Westphal - Federal Ministry of Finance, Germany - Beyond the crisis – Conditions for the relaunch - September 2020

Industry views

S. Broyer - S&P Global Ratings Europe Ltd. - The role of the Capital Markets Union in avoiding the liquidity trap - April 2021

V. Grilli - Bank EMEA, J.P. Morgan - Strengthening the internationalisation of the euro and the EU’s future competitiveness through common debt issuance - April 2021

P. Heilbronn - European Bank for Reconstruction and Development (EBRD) - Recovering sustainably from the Covid-19 crisis – focus on CEE - April 2021

C. Roux - Groupama - Lighter capital requirements would allow European insurers to provide capital to the economy - April 2021

L. Zylberberg - Caisse des Dépôts (CDC) - Public finance is not the problem, it’s part of the solution! - April 2021

J-J. Bonnaud - Eurofi - Europe must take charge of its strategic interests - September 2020

D. Blessing - J.P. Morgan AG - Relaunching productive investment in Europe - September 2020

C. Brzeski - ING - Fiscal policy to the rescue - September 2020

J. Lemierre - BNP Paribas - What are the priority measures that would enable the EU financial industry to contribute to a strong and rapid recovery in Europe? - September 2020

F. Oudéa - Société Générale - Europe can no longer afford a muddle through approach to its financial system - September 2020

C. Sewing - Deutsche Bank AG - A partnership for growth: financing recovery and growth in Europe - September 2020

H. Schleweis - Deutscher Sparkassen- und Giroverband (DSGV) - Recognising and ensuring the stabilising effect of smaller banks - September 2020

A. Weber - UBS Group AG - Creating a stronger, greener, and more integrated Europe - September 2020

L. Zylberberg - European Long-Term Investors Association (ELTI) - Let’s preserve Long-Term Investment! - September 2020