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#Coronavirus - Lagarde calls for an ambitious and co-ordinated fiscal response #ECB

Published

6 years ago

March 12, 2020

EU Reporter Correspondent

European Central Bank President Christine Lagarde

European Central Bank President Christine Lagarde has said that the coronavirus is proving to be a significant shock to the EU’s economies and that banks need to be in a position to continue financing households and corporates experiencing temporary difficulties. There is also unanimous support for strong co-ordinated action to protect the economy.

Speaking at her monthly press conference, Christine Lagarde said the ECB will allow banks to operate temporarily below the capital requirements required by the Capital Requirements Directive. It is expected that this capital relief will be used to support the economy rather than to increase dividends or increase remuneration.

Lagarde said that governments and all other policy institutions are called upon to take timely and targeted action. She was insistent that Europe would need an ambitious and co-ordinated fiscal policy response, adding that the governing council strongly supports the commitment of eurozone governments and the European institutions to joint and co-ordinated policy action in response to the repercussions of the spread of the coronavirus.

Looking beyond the disruption stemming from the coronavirus, Lagarde said eurozone growth is expected to regain traction over the medium term supported by favourable financing conditions, the eurozone fiscal stance and the expected resumption in global activity.

Lagarde welcomed the measures already taken by several governments to ensure sufficient health sector resources and to provide support to affected companies and employees, in particular, she said measures such as providing credit guarantees are needed to complement and reinforce the monetary policy measures that the ECB announced today. Finally, she welcomed the commitment of the eurozone governments and the European institutions to act now, strongly and together in response to the repercussions of the further spread of the coronavirus.

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