Pablo Hernández de Cos: Macro economic policy in transition - perspectives from advanced and emerging countries

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the Panel "Macro economic policy in transition - perspectives from advanced and emerging countries", Macro conversations, IMF Annual Meetings, 13 October 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

As in the rest of the world, the COVID-19 outbreak has given rise to a health and economic crisis in the euro area that is unprecedented in recent history. And, again, similarly to other jurisdictions, economic authorities have in the face of this situation responded forcefully both at the domestic and European level.

In the particular case of monetary policy, in the last seven months, we, at the European Central Bank (ECB), have deployed an extensive package of measures to mitigate the impact of the pandemic on the euro area economy. From the outset, the ECB faced three significant pandemic-related challenges: first, the need to stabilise financial markets throughout the euro area, to head off cross-country financial fragmentation; second, to protect the supply of bank credit, which is especially important for funding for households and SMEs in Europe; and third, to counter the downward pressure on the medium-term inflation outlook stemming from the COVID 19 crisis, in accordance with our price stability mandate.

Against this backdrop, we adopted a series of measures that may be grouped into two main blocks.