Although banks and financial institutions were better prepared after the 2008 financial crisis, Pablo Hernández de Cos, head of the Bank of Spain warned the true cost of the pandemic will not be known until protective measures are withdrawn. Despite praising the European Central Bank and Spain’s financial measures, Mr de Cos stressed the consequences of the pandemic in the long-term are not certain. Due to this, he called on governments to act now before it is too late to solidify the financial market in the EU.
He also called for the provisions set out in the Basel III agreement – designed to mitigate risks within the sector – to be implemented rapidly.
Mr de Cos said at the opening of the Financial Stability conference: “The crisis is far from over.
“Now is the time to act.”
He did, however, praise some of the measures put in place to stop the worst of the pandemic.
He added: “The current crisis has led to extensive and extraordinary monetary and fiscal support measures, which have largely limited the impact on the banking sector, which would otherwise have faced a global economic downturn under worse conditions.
“Had it not been for the measures taken, he explained, banks would have reduced their ability to finance the real economy.”
In order to help the bloc recover from the pandemic, the EU put forward the mammoth fund to boost economies and stimulate recovery.
In addition, the EU also agreed a budget worth up to €1.2trillion (£1trillion).
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Under Article 7 of the Treaty of Europe, a member state can have its voting rights suspended if it violates the EU’s standards.
Mr Asselborn said: “Europe will not digest the end of the rule of law.
“Europe will die from such a development.
“Europe has been built on democracy, liberty, respect – and the rule of law.
“We have to realise this, not only the members that respect the rule of law but also in places where the thinking is that the rule of law is not that important.
“If you challenge the rule of law, you do it for a reason.
“And this reason is the retention of power.”
Additional reporting by Maria Ortega.