ECB Executive Board member Isabel Schnabel told German newspaper Frankfurter Allgemeine Sonntagszeitung that the central still have all of its tools available to mitigate the crisis. She said, “the ECB is in the comfortable position of having a large set of tools, none of which has been used to its full extent”
“We have the key interest rates, we have instruments for providing liquidity to the banks, and we have the asset purchase programs,” Schnabel added. “The claim that central banks have run out of tools simply doesn’t match up to the facts.”
Though, she also noted that monetary policy alone was insufficient. “There are proposals to use the European Stability Mechanism or the European Investment Bank. The issuance of one-off ‘corona bonds’ would also be conceivable. It is up to politicians to decide,” Schnabel said.
Separately, Vice President Luis de Guindos told Spanish TV La Sexta on Sunday that the impact of coronavirus pandemic ” will be very hard and will place Europe into a recession.” The poor Q1 will “drag the overall European economy into negative growth rates in the year”. Though, he’s optimistic that “we will see positive growth rates for Europe” in Q2. He also urge EU to issue pan-Europe bonds to help counter the economic impacts.
