ECB’s de Cos: Crisis Far from over, Financial Stability Impact Yet to Come
18 October 2021
By David Barwick – FRANKFURT (Econostream) – The pandemic-related crisis is not nearly over and its ramifications for financial stability will be felt only when policy support is withdrawn, European Central Bank Governing Council member Pablo Hernández de Cos said Monday.
In opening remarks at a conference on financial stability, de Cos, who heads Banco de España, said that ‘the crisis is far from over and its final impact on the banking sector and financial stability will foreseeably materialise as support measures are unwound.’
Banking sector capital and liquidity positions are still in good shape even after a year and a half of the crisis, he said.
‘Overall, we can conclude that the global banking system has been able to complement and support monetary and fiscal authorities’ efforts to maintain economic activity during the pandemic, helping to absorb the shock rather than amplifying it, in opposition to what happened during the GFC’, he said.
According to de Cos, the Basel bank regulatory reforms successfully shored up the resilience of the banking system, which ‘would have faced greater stress derived from an unprecedented global economic downturn had the Basel III reforms not been adopted, thus reducing their ability to provide financing to the real economy.’