ECB’s Rehn: To Do Everything Within Mandate to Support Euro Area

18 April, 2020

By David Barwick – FRANKFURT (EconoStream) – The European Central Bank will do everything in the scope of its mandate to address the economic fallout from the pandemic, ECB Governing Council member Olli Rehn said on Friday.

In remarks at the Reinventing Bretton Woods Committee Panel Discussion, held virtually, Rehn indicated that the Eurogroup’s measures went in the right direction but not far enough, according to a text made available by the Bank of Finland, which he heads.

The various steps taken recently by the Eurosystem were “imperative”, given member state economies will shrink “roughly by between 5 – 15 % this year,” he said. These decisions, along with the already accommodative policy stance, will provide households, companies and the banking sector with “ample liquidity and funding support.”

“We will do everything within our mandate by the Eurosystem to support the euro area citizens and businesses, particularly SMEs, over these troubled times,” he added.

As for the comprehensive economic policy response to the pandemic by the Eurogroup of Eurozone finance ministers, this was “a significant but hardly a conclusive deal,” he said. “The crisis response will be made more powerful if all policies reinforce each other. In particular, a bold and coordinated fiscal policy response is crucial to support the recovery.”

Besides being a question of solidarity, such a response is in each member state’s own best interest, given the economic interconnectedness of Europe, he said.