FXStreet reports that according to economists at Natixis, the economic policy conducted in response to the coronavirus crisis should prevent the same mechanisms as those seen after the 2008-2009 crisis in the eurozone.
“The ECB need to monetise fiscal deficits, to prevent the rise in public debt from worsening the countries’ fiscal solvency; if the ECB buys government bonds and keeps them irreversibly on its balance sheet, these bonds held by the ECB no longer have any effect on the countries’ fiscal solvency.”
“There is a need to prevent corporate bankruptcies (to prevent a banking crisis and capital destruction), hence the importance of measures to support companies decided by all countries in 2020.
“The necessity to prevent the rise in corporate debt from leading to a decline in corporate investment after the coronavirus crisis, hence the importance of trying to strengthen companies’ equity capital and implementing investment support measures.”
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