ECB’s de Guindos: See Situation Lasting Weeks Or Months, No More

19 March, 2020

By David Barwick - FRANKFURT (EconoStream) – The current crisis differs from the Great Recession in that it will last a matter of months at most, European Central Bank Vice President Luis de Guindos said in a radio interview Wednesday, according to a text of his remarks provided by the ECB. Speaking to Spain’s Radio Nacional, de Guindos echoed various Board colleagues in assuring that the ECB would take any needed measures and in calling for a joint European fiscal response to the situation. Compared to the period of economic hardship that began in 2008, “the key difference is that we expect this to be temporary…We’re talking about the current situation lasting for weeks or months, not longer.” The crisis is about public health rather than the financial system, he said, even if the impact in economic terms would be “huge” and could, were authorities to fail to act, lead to a financial crisis. Once the coronavirus outbreak is under control, things will settle down, he said, suggesting that China was “a leading indicator of what might happen.” “After experiencing a drastic fall in economic activity for two months, things have started to recover there and we can see how the economic situation is gradually getting back to normal,” he said. In Europe, the ECB would “do what needs to be done,” he said. “There is no doubt about that.” However, fiscal policy has to be the main source of support, he added. Although individual governments have started to react, “a joint, pan-European response would be very important,” he said.