ECB’s Lagarde: Committed to Favourable Financing Conditions Well Into the Recovery
2 June 2021
By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Wednesday reiterated the ECB’s determination to ensure that euro area financing conditions remain favourable well into the economic recovery process.
In a speech upon receiving the Prix Turgot 2021, Lagarde said that ‘[s]trong policy support will continue to provide a bridge over the pandemic and well into the economic recovery. The ECB is committed to preserving favourable financing conditions throughout this period.’
According to Lagarde, how committed policymakers appear to be proved ‘a crucial variable in effective policymaking’ during the euro area sovereign debt crisis. At first, the importance of this was not fully apparent, she said, but it was later understood that ‘in a period of high uncertainty, being seen as fully committed could shift financial markets between polar opposites – from working against us to working with us.’
The contribution of the EU’s decision in favour of banking union and the actions of the ECB to stemming the crisis demonstrated the power of policymaker commitment, she said. ‘It became clear that our commitment to the euro was beyond doubt’, she said. ‘The euro is, of course, irreversible.’
When the pandemic struck, ‘[t]he message we sent was clear: there are no limits to our commitment to the euro’, she said of the ECB’s response. ‘And that message holds true today.’
What governments did was just as significant, she said, calling the EU recovery fund ‘a watershed’.
‘As a result, I believe that the intrinsic fragility of the euro area has now declined’, she said.