An emergency package worth €750bn ($820bn) for combating the economic fall out of the coronavirus pandemic was launched by the European Central Bank (ECB). The money will be used for purchasing of government and company debt all across the eurozone and include those issued by Greece and Italy – whose economies are already in trouble.
“There are no limits” to its commitment to the euro, tweeted ECB boss Christine Lagarde.
Major stimulus plans have been announced in recent weeks by central banks and governments all around the world.
The new emergency package has been called the Pandemic Emergency Purchase Programme and it comes just six days after the ECB had also announced other measures that were not enough to calm down the markets. That put more pressure of the ECB to come out with more measures to support the European economies.
In these “extraordinary times”, everything in its powers to support the euro would be done by the ECB, said Lagarde while announcing this latest move by the central bank.
Te ECB said in a statement that the asset purchasing scheme that it had announced last week will in fact be of a temporary nature and it will come to an end once the ECB “judges that the coronavirus Covid-19 crisis phase is over, but in any case not before the end of the year”.
The latest announcement from the ECB was made after a meeting of the bank’s 25-member governing council that were held under emergency circumstances over phone as on Wednesday evening.
Compared to the drastic action taken by the US Federal Reserve, critics had been severe of the ECB in recent days and accused the bank of not doing enough to support the eurozone economy.
While announcing a stimulus programme worth $700bn, the United States Federal Reserve slashed interest rates to almost zero on Sunday.
That rate cut was part of a joint action that was launched by the United Kingdom, Japan, eurozone, Canada and Switzerland.
In order to increase the availability of dollars for commercial banks, the Fed said it would work with other central banks as part of that announcement, the Fed said.
These so-called currency swap lines were an important tool in maintaining financial stability after the 2008 banking crisis.
“Today’s coordinated action by major central banks will improve global liquidity by lowering the price and extending the maximum term of US dollar lending operations,” Bank of England Governor Mark Carney said in a joint statement with Andrew Bailey, who succeeded him as BoE chief on Monday.
A pledge to purchase risky assets at double the current pace was also made by the Bank of Japan as it eased monetary policy while also announcing a new loan programme to extend one-year, zero-rate loans to financial institutions.
(Adapted from BBC.com)