Upcoming ECB Decision Aims to Keep Credit Flowing in Pandemic
(Bloomberg) -- The European Central Bank’s main goal will be to keep credit flowing to the economy through the pandemic when it takes crucial decisions on supervision and monetary policy in the coming weeks, according to Vice President Luis de Guindos.
The institution is currently considering multiple options to add monetary stimulus in December, he said in a Bloomberg TV interview, pointing to emergency asset purchases as the “core element” of the ECB’s fight against the crisis. The supervisory arm will have to decide on whether to allow banks to restart paying dividends, after issuing a de-facto ban this year to preserve capital buffers, he said.
“The main purpose of all the measures we’ve taken is to keep the flow of credit alive,” Guindos said Wednesday after presenting the ECB’s Financial Stability Review. “We are totally focused on trying to overcome the impact of the pandemic because we know that eventually the pandemic will fade away.”
The Governing Council is widely expected to scale up its emergency bond-buying program and offer new long-term loans at its Dec. 10 policy meeting. At that time, new economic projections will be available to provide an updated view of the impact of the coronavirus crisis.
Those forecasts will be key for all ECB decisions, Guindos said. Policy makers will also take into account the evolution of oil prices and the latest progress on vaccines.
“The news about the availability of a vaccine has had a very positive impact on sentiment and animal spirits,” Guindos said, “so that is a ray of hope.”
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