Report
Coronavirus crisis in the euro zone: The supply of bank loans will be the key economic issue
Normally, in recessions, the situation of banks deteriorates, borrower default risk rises and the supply of bank loans contracts, which exacerbates the recession. The coronavirus crisis is leading to large revenue losses in some sectors. Preventing a wave of bankruptcies will therefore require an expansion and not a contraction in credit supply. How can this be achieved? Monetary policy (quantitative easing, TLTRO, interest rate cuts) may not be very effective; Through bank regulations (countercyclical reduction in the capital ratio); Through government-issued guarantees for business loans, which would undoubtedly be effective.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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