The measures adopted by the European Central Bank in response to the coronavirus emergency are sufficient and effective, but the bank is ready to do more if necessary, Ignazio Visco, a member of its governing council, said on Monday.
With Europe‘s economy under pressure from the virus outbreak, the ECB has agreed to a range of stimulus measures including ultra-cheap loans to banks and asset buys worth 1.1 trillion euros ($1.18tn) this year, with the aim of keeping borrowing costs at rock bottom level.
“The set of measures adopted has been effective in relieving tensions. We believe today that these are sufficient, but we are ready to do more if needed,” Visco, who is also governor of the Bank of Italy, told newspaper La Stampa in an interview.
He added that the ECB was ready to increase the size of the emergency bond purchase program (PEPP) announced last week, as well as changing its composition and length in time.
“We will do whatever it takes to ensure the good functioning of the financial markets and the transmission to monetary policy in all of the euro area,” Visco said, calling for a coordinated effort by all European Union member states in order to come out of the emergency better and more quickly.
Asked about a so-called “coronabonds” – eurozone bonds used to cushion the economic fallout from the coronavirus outbreak – Visco said it was important to rapidly define an instrument that would allow the area to launch a “reconstruction” phase.
The European Commission this week is likely to present a tool for the eurozone’s European Stability Mechanism (ESM) bailout fund to fight the effects of the epidemic, Vice President Valdis Dombrovskis said on Saturday.
The EU executive arm has been asked to come up with an instrument to involve the fund in supporting economies hit by the coronavirus, he said.
Italy has registered more deaths than any other country in the world, while the number of confirmed cases is second only to China, with the tally rising by 5,560 to 59,138 on Sunday, the Civil Protection Agency said.
“The impact [on the Italian economy] this year will be high, but the adopted policies will limit its strength and length,” Visco said.
The Italian Treasury currently expects the economy to contract around three percent this year, hit by the lockdown imposed to fight the country’s coronavirus outbreak, two sources familiar with the matter told Reuters on Friday.