“The tools at our disposal are not exhausted. If we need to do more, we will do it.” This is stated in an interview with Le Monde ECB President Christine Lagarde who recognizes as “the second wave of pandemic in Europe, particularly in France, and the new restrictions that derive from it increase uncertainty and weigh on the recovery” which after the summer rebound was irregular, uncertain and incomplete and now it risks losing momentum. “
“We will keep the indicators under strict control throughout the autumn” he adds, explaining how among the effects of the crisis opened by the pandemic “the loss of jobs is among the most serious” because “they represent a risk for the social fabric, income family, demand and growth. Eurozone governments need to be extremely aware of this. ” The ECB, he adds, believes it has “saved one million jobs in the euro area”.
Compared to the 2008 financial crisis in which the public budget choices “were not consequent, leaving the central banks alone, especially in the euro area, this time we are in a different scenario. Fiscal support is playing its part and it is working hand in hand with monetary support. This is unprecedented and will be effective. ” Thus the president of the ECB, who recalls having stressed, “at the Eurogroup meeting in April the need for a concrete, rapid and flexible plan, but at the same time aimed at the countries and sectors that need it most”. “According to our assessment – he explains – this corresponded to an endowment between 1000 and 1500 billion euros” and taking into account all the interventions put in place “we could say that we have reached this amount”.
The euro is irreversible
Faced with the fears that this crisis could re-start the fears of the disintegration of the single currency “I repeat the words of my predecessor: the euro is irreversible”. The president of the ECB reiterates this, underlining how the Recovery Plan, “a collective loan that represents 5% of the EU’s GDP, is an important turning point for Europe” which “has completely changed things”. “Now – he explains – we have an additional tool at our disposal, even if it is an exception. National governments have shown that, if the situation requires it, there is clearly the will to work together in solidarity. To have more than 50% of the 750 billion euros in the form of grants for the countries and sectors most affected is truly innovative. ”
The Recovery Fund, a historic opportunity
On the Recovery Fund “the Commission’s objective is to be able to distribute these funds at the beginning of 2021 and this timing must be respected”. And, Lagarde adds, “the ball is in the field of national governments, which must present their recovery plans – some of which are already ready – and the Commission, which will have to examine them carefully but quickly”. But “it is essential that this extraordinary plan, which has broken important taboos in some countries, be a success”. “If he does not have clear objectives, if he gets lost in an administrative labyrinth and does not support the real economy in reorienting our countries to be more digital and green, we will have missed a historic opportunity to make a difference” concludes the president of the ECB.