Monetary Policy and Credit in the COVID-19 Crisis
In addition to the COVID-19 pandemic, developments on the financial markets and in the credit sector in the euro area in 2020 were dominated by the extensive interventions of the European Central Bank. In response to the crisis, the ECB made its monetary policy particularly expansionary in 2020. A key element was the introduction of the Pandemic Emergency Purchase Program (PEPP), which stabilised secondary market yields on 10-year government bonds. Short-term interest rates in the euro area remained in negative territory in 2020. This created stable financing conditions. Bank lending supported corporate liquidity. The regulatory ratios of the banking industry in Austria remained unchanged. Despite the successful stabilisation in the short term, there are still risks to the economy and the banking system. Among other things, these loom in the event of corporate overindebtedness, a tightening of financing conditions or a delayed rise in insolvencies.