How the ECB Can Fight the Coronavirus Crisis
Christine Lagarde has several tools in her locker, including a new round of cheap loans for banks to keep SMEs solvent, interest rate cuts or more QE.
Defining moment.
Photographer: SAUL LOEB/AFPAs the Coronavirus epidemic rocks the world economy and global markets, the world’s main central banks have started speaking up to reassure investors. This verbal intervention has sent stock markets soaring, in the hope that it’s a prelude to concrete policy action.
The European Central Bank was the last large monetary authority to step in. On Monday night, President Christine Lagarde issued a statement saying the central bank stands ready “to take appropriate and targeted measure, as necessary and commensurate with the underlying risks.” While Lagarde could have been more forceful in her choice of words, it’s good she chose finally to intervene. Regardless of what critics say, the ECB can still do a lot to support the euro-zone economy at a time of crisis.