Arnoud Boot, Elena Carletti, Hans‐Helmut Kotz, Jan Pieter Krahnen, Loriana Pelizzon, Marti Subrahmanyam 25 April 2020
The involvement of the EU in fighting the detrimental consequences of the Covid crisis has to be expanded (e.g. Bénassy-Quéré et al. 2020). This column builds on our earlier work on the coronavirus crisis and its implications for financial stability (Boot et al. 2020a, 2020b, 2020c). We have argued that massive financial support during the Covid crisis is warranted in order to bridge the almost universal cash flow shortfalls at the firm level, and across euro area member states, caused by the series of shutdowns.
The provision of bridge financing is also necessary from a systemic risk perspective. Significant cash flow shortfalls – highly