Following today’s decisions of the European Central Bank to expand its quantitative easing programme, and the Single Supervisory Mechanism to release banks from their counter-cyclical capital buffers, Iratxe Garcia, S&D Group leader of the Socialists and Democrats in the European Parliament said:
“The coronavirus is taking a heavy toll on the health and lives of Europeans, and could also spark an unprecedented economic downturn. Against the backdrop of an already low GDP growth and low inflation, the real risk is now health, social, trade and a banking crisis simultaneously.
“If the 2008 financial crisis has taught us anything, it’s that monetary policy alone cannot do the job, and that national measures are not enough – we need a joint and coordinated European fiscal stimulus. We take note of the measures presented today by the ECB, but without a massive coordinated and common fiscal response at the EU level, it will be like a drop in the ocean. We know from experience that acting fast and acting together is the only effective answer to a crisis that affects us all.
“Building on the proposal for a COVID-19 Response Investment Initiative presented by the Commission, we need to urgently come forward with a real European fiscal capacity with enough firepower. All EU countries will be affected and our response must be on a par with the economic shock and show solidarity. Our priority must be to save lives, but we are also called on to do our utmost to ensure that after the virus outbreak, people will still have jobs to return to.”
Jonás Fernandez, S&D MEP and spokesperson on economic and monetary affairs, added:
“To counter-act a new recession provoked by the coronavirus outbreak, we must make the best-use of our toolbox and also complete the EMU instruments to fight coherently and efficiently; therefore eliminating negative side effects. Firstly, the Commission is called upon to review the European Financial Stability Mechanism, among other new possible options, to feed a specific EU programme to fight against the coronavirus crisis. Secondly, the equity of the European Investment Bank must be increased as is already foreseen under the Green Deal. Thirdly, and most importantly, the potential offered by the European Stability Mechanism must be used through a mandatory credit line to finance a common investment instrument.
“We call on the Eurogroup meeting next Monday to seriously look into the possibility of a stimulus package agreed at European level that is jointly financed through the ESM and in which all member states would participate. The severity of the coronavirus crisis calls for bold and innovative action. If met with the right and coordinated response, the economic shock of the coronavirus would only be temporary.”