ECB officials are poised to reconsider the region’s 750 billion-euro recovery fund to make it a permanent tool to combat economic shocks, e.g. the coronavirus-driven crisis. “This recovery plan tool is a response to an extraordinary situation. We should discuss the possibility of it remaining in the European toolbox so it could be used again if similar circumstances arise,” European Central Bank President Christine Lagarde pointed out.
The initial aim of the recovery fund worth €750 billion was to allocate money to ease the fallout caused by the coronavirus pandemic. “Since the rebound we saw over the summer, the recovery has been uneven, uncertain and incomplete and now risks losing momentum,” Lagarde said. This is why Lagarde is trying to maintain the fund among the tools that the regulator can use in the future if needed. She also added that this is not the only tool at the ECB disposal. Lagarde said that the central bank would adopt a new stimulus package if necessary to revitalize the European economy.
Investors are a bit skeptical about this statement since EU leaders were able to agree on a €750 billion rescue plan in mid-summer only after the prolonged and hot debates. The major part of the raised funds ,about €500 billion, will be allocated to non-refundable grants for the countries severely hit by the pandemic. The remaining funds will be used for loans.
