The COVID-19 health crisis has become a global emergency. The necessary containment measures to restrict its impact and duration have, in turn, serious consequences for economic activity. These are still difficult to rigorously assess, but are on an unprecedented scale. The common goal is to ensure that the severe economic downturn under way is transitory and does not affect citizens over a prolonged period.
Since the onset of this crisis, the Banco de España has been working to ensure the sound functioning and stability of the financial system, so that it is in a position to support households and firms with funding during this extraordinarily difficult period. In accordance with its Law of Autonomy, the Banco de España has stepped up in its role as adviser to the Government, both in terms of its analysis of the economic impact of this crisis and of the domestic and European policies needed to mitigate these effects and their persistence.
In all areas under its remit, the Banco de España is participating actively in the international organisations of which it is a member to offer the swift and effective response this crisis requires. As a member of the Eurosystem, it has participated in the urgent decisions adopted by the ECB, such as the new asset purchase programme (PEPP) worth €750 billion. The programme is geared to maintaining favourable financing conditions throughout the euro area.
It has also played an active part in the decisions of the ECB’s Single Supervisory Mechanism. These are aimed at relaxing the capital and liquidity requirements for banks, in addition to allowing a more flexible application of accounting standards. At the same time, banks have been asked not to distribute dividends to their shareholders at least until October this year. In that way, they will have all possible capital available to offer financing to economic agents. Measures geared to providing flexibility and financing capacity to the financial system have been adopted in other international institutions of which the Banco España is a part, such as the European Banking Authority (EBA), the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB).
Against this background of enormous uncertainty, the Banco de España will continue to collaborate closely with the economic authorities in order to offer the appropriate response to this crisis. In particular, it will step up its monitoring of economic and financial developments.