The Response of the European Central Bank to the Current Pandemic Crisis: Monetary Policy and Prudential Banking Supervision Decisions

25 Pages Posted: 21 Jul 2020

See all articles by Christos Gortsos

Christos Gortsos

National and Kapodistrian University of Athens

Date Written: July 13, 2020

Abstract

Immediately after the outbreak of the current pandemic crisis, the EU developed a (rather) consistent strategy, by taking measures in order to deal with health emergency needs, support economic activity and employment, preserve monetary and financial stability and prepare the ground for recovery; these contain a combination of government fiscal stimuli (with extensive resort to the principle of solidarity), emergency liquidity and monetary policy measures and measures relating to financial stability. After briefly reviewing all these measures from a systematic point of view, the present article further analyses the role of the European Central Bank (ECB) during the first phase of this crisis, both in its capacity as a monetary authority within the Eurosystem and in its capacity as prudential banking supervisory authority within the Single Supervisory Mechanism (SSM), with particular emphasis on the treatment of non-performing loans (NPLs). Its specific contribution to financial macro-prudential oversight within European Systemic Risk Board (ESRB) is also highlighted.

Keywords: pandemic crisis, ECB, ESRB, conventional monetary policy measures, unconventional monetary policy measures, SSM, EBA, micro-prudential supervision, NPLs, “Basel III impact”, macro-prudential buffers, CRR

JEL Classification: G18, G21, G38, K20, K22

Suggested Citation

Gortsos, Christos, The Response of the European Central Bank to the Current Pandemic Crisis: Monetary Policy and Prudential Banking Supervision Decisions (July 13, 2020). European Banking Institute Working Paper Series 2020 - no. 68, Available at SSRN: https://ssrn.com/abstract=3650370 or http://dx.doi.org/10.2139/ssrn.3650370

Christos Gortsos (Contact Author)

National and Kapodistrian University of Athens ( email )

Akadimias 45
Athens, 10672
Greece

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