Publicaciones

While COVID-19 spurred the Fed’s decision to adopt an average inflation targeting regime, the ECB is more constrained in the way it can support the emergence of dynamic business growth. That said, it did launch the 1.35 trillion-euro Pandemic Emergency Purchase Programme (PEPP) and has extended its targeted long-term refinancing operations (TLTROs). This lax monetary environment enabled the Spanish banks to increase their use of the ECB’s long-term financing facilities by 113.66 billion euros between March and July. In parallel, under specific schemes, such as the state-backed guarantees for business loans, corporate financing increased from a year-on-year rate of 1.1% in March to 6.1% in June. One of the most complex issues facing Spain is how long its extraordinary financing flows should continue so as not to significantly impair overall asset quality. Although non-performance has held steady at around 4.7%, this metric is expected to deteriorate throughout the rest of 2020 and much of 2021, with the magnitude of the rise in NPLs dependent on the continuation of the furlough scheme, speed of the economic recovery, and lingering uncertainty regarding COVID-19. Nevertheless, the crisis could prove an opportunity for Spain if public and financial intervention results in higher levels of business dynamism.

Carbó, S. y F. Rodríguez (2020). «The financial sector and economy in light of COVID-19: Situation and outlook for the autumn». SEFO – Spanish Economic and Financial Outlook 9, n.º 5 (septiembre): 31-37.