ECB’s Centeno: Quite Important that Financing Conditions Favourable for All Sectors

4 March 2021

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s stated intention of safeguarding favourable financing conditions in all economic sectors is an important aspect of its current policy stance, ECB Governing Council member Mario Centeno said Thursday .

In an online interview with Politico, Centeno, who heads the Bank of Portugal, said that non-financial corporates had been damaged by the economic fallout from the pandemic and that this would have an effect on the recovery.

Whereas the initial shock from the pandemic hit all sectors equally, ‘this is not true anymore’, he said. ‘There is nothing structural about it, but it is indeed related with the nature of the pandemic.’

‘And this part of the sentence – “in all sectors” – is quite important’, he said, referring to ECB President Christine Lagarde’s insistence that it was ‘essential to preserve favourable financing conditions over the pandemic period for all sectors of the economy.’

Resilient investment and the increase in savings would be ‘an important factor for the recovery’, he said, which would also benefit from international trade’s having almost returned to pre-pandemic levels.

‘The macroeconomic data has so far generally surprised everybody on the upside’, but companies already under pressure are being further burdened by ongoing pandemic containment measures, he said.

‘And this is my main concern … how long will our firms stand a partially closed economy for a period that is not any longer absolutely temporary for some of them?’ he said. ‘We should make no mistake: the economic and financial positions of the non-financial sector is damaged and that will impact the recovery all over the world.’

It remains too soon to assess the extent of the damage, as the crisis is not over yet, he said.

Uncertainty will lift only with vaccination, he said. Europe has no ‘particular problem’ in vaccinating citizens, he asserted.