Europe | The ECB's response to COVID-19: an assessment

Now that major central banks are preparing to withdraw the monetary stimulus packages they launched to tackle the COVID-19 crisis, it seems a good moment to assess the ECB's actions during the last two years, what it has achieved and what it has prevented.

Key points

• Key points:
• From the start of the pandemic, the ECB immediately adopted very powerful extraordinary monetary policy measures—coordinated with the fiscal authorities—with which to try and avoid an economic and financial collapse, which would have had very severe consequences for eurozone countries.
• Its response has been quick, flexible and agile. It has recalibrated its measures in real time and with a forward-looking stance; taking a preventive approach and opting to protect itself from potentially more adverse scenarios, before they occur.
• Unlike the sovereign debt crisis of 2011 and 2012, eurozone countries' governments, including those on the periphery, have not only had markets open, but have also been able to obtain funding with very low risk premiums and interest rates.
• In a recent BBVA Research study, we pointed out that the economic effects have been significant, especially in the most vulnerable eurozone countries. At the same time, however, the extraordinary measures taken by the ECB have opened up a window of opportunity of at least two years during which eurozone countries can carry out supply-side policies and reforms with which to transform their economies.
• Focusing on Spain, at the very least it has avoided a further fall in GDP of over 3pp, with, in addition, indirect effects resulting from the ECB having enabled the adoption of fiscal measures on a national level — which provided an impact of around 8pp in the worst moments of the crisis.

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