ECB’s de Cos: Must Prevent Any Major Financial Component to Crisis

24 June 2020

By David Barwick – FRANKFURT (EconoStream) – It is essential that the financial dimension of the current economic crisis be kept limited, European Central Bank Governing Council member Pablo Hernandez de Cos said on Wednesday.

Speaking at a webinar of Esade Business School’s Centre for Economic Policy and Political Economy, de Cos, who heads the Bank of Spain, said, ‘I believe that we all have to be clear that we have to avoid a major financial component to this crisis and that financing conditions tighten, and for this the monetary policy of the European Central Bank is absolutely fundamental’.

De Cos emphasized – as previously – that ‘this crisis is generating deflationary effects’.

In the longer term, the economic fallout of the pandemic is likely to be associated with structural changes and losses in productivity, he warned.

Should a relatively pessimistic scenario materialize, it would be ‘very probable that financial markets’ … concern about the sustainability of public debt would increase’, he said.

He called for a ‘powerful European response’ to the crisis ‘by reason of both efficiency and solidarity’.