9th April 2020 By David Barwick - FRANKFURT (EconoStream) – The European Central Bank has not run out of ammunition and is committed without limit to supporting the common currency, ECB President Christine Lagarde said Thursday. In interviews with French daily Le Parisien and French radio channel France Inter, Lagarde argued that no countries of the area were in danger of defaulting in the wake of the pandemic, but that the ECB would forestall any such risk that appeared. Asked if there were other options available to monetary authorities if the situation worsened, Lagarde said, “Yes, but I won’t tell you what they are, because – let’s face it – their impact will partly rely on an element of surprise. But I can assure you: there are no limits to our commitment to the euro area.” Debts incurred to mitigate the economic impact of the pandemic should be repaid only gradually and in any case over a period of much more than ten years, she said, given that “certain countries of the Eurozone are going to see their debt ratio increase significantly.” Soaring debt, however, would not lead to any sovereign defaults, she affirmed. Not only is the euro area in a better position to counter the risk of fragmentation, but the ECB “has its entire toolbox at its disposal and it will provide the necessary shield to protect the euro area.” Greece’s financing situation nowadays is “quite solid” and the ECB is there, she said. “As soon as we see a risk, as soon as we see tension, we will be active; we will act to prevent this risk, because this is our mission.” Lagarde urged against any “fixation” on so-called coronabonds, noting that European solidarity with those countries most in need could instead be expressed in the form of a common European budget to fund the recovery or a reconstruction fund supporting greener, more digital growth. She disagreed with comments by former EU Commission President Jean-Claude Juncker, who recently predicted that the current crisis would be less painful than that of 2008. Economists generally equate a month of lockdown with a loss of 2% to 3% of annual GDP growth this year, she observed. “That would imply a fall in GDP of 3.5% to 4% in a scenario where the lockdown lasts a few weeks, and of 9% to 10% in the event of a longer lockdown lasting several months,” she said, cautioning that these remain estimates. Still, banks in Europe are “much stronger” than in 2008, she affirmed. “Savers can rest assured.”