Much like the rest of the world, the pandemic has hit the European Union hard. The pandemic has halted economic and social activities all across the globe, with many countries only recently beginning to reopen their economies. The European Union has tackled the issues caused by the pandemic from a variety of angles, from re-opening plans to fiscal policies to monetary policies. Let’s look at what the European Union has done to protect itself from COVID-19’s disastrous effects.
Let’s start with how the European Union plans to reopen its economy. The European Union presented a set of guidelines to its member nations on how to reopen their economies amid a pandemic. The goal of providing a set of guidelines for when member nations could reopen was to provide a uniform set of rules that countries could abide by to open their economies. This way, every country knows how to properly open their economies while minimizing the risks to both their own countries and neighboring countries within the European Union. These guidelines for reopening suggested countries wait until coronavirus cases slowed down and stabilized, they have developed an adequately prepared health system to deal with the pandemic, as well as implemented contact tracing measures. In addition to reopening guidelines, the EU implemented travel restrictions going to and from member countries until the rate of case growth decreased in early June as well as implemented a travel ban on high risk countries.
Now that the EU’s reopening plan is covered, let’s go onto the EU’s fiscal plans to deal with the pandemic. The European Union has passed numerous fiscal plans to help member countries deal with the effects of COVID-19. These fiscal plans include the Next Generation EU recovery fund and a whole lot of economic stimulus packages to help countries recover from the economic damage the pandemic has wrought. In addition to these fiscal plans, the EU has also allocated 4% of their budget to help member countries improve and expand their healthcare systems as well as provide financial support for economic sectors struggling from the economic effects of COVID-19.
The EU’s monetary plans are as numerous as their fiscal plans. The European Central Bank provided monetary support to institutions by buying an immense amount of assets until the end of 2020, as well as introducing a new liquidity facility. In addition to these monetary policy plans, the ECB announced a large amount of collateral easing measures, a grandfathering of the eligibility of marketable assets that are typically used as collateral in the Eurosystem credit operations falling below minimum credit requirements. Additionally, the ECB allowed significantly important institutions to operate below Pillar 2 guidance temporarily, as well as providing temporary flexibility to the credit classifications as well as expectations of loan provisioning in regard to non-performing loans that are covered by public guarantees and the COVID-19 payment breaks.
This article was written by Ian, an intern at Irish Mortgage Brokers and Yes.ie from the USA.