EU/EA measures to mitigate the economic, financial and social effects of coronavirus
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IN-DEPTH ANALYSIS
FOR THE ATTENTION OF THE ECON COMMITTEE
EU/EA measures to mitigate the economic, financial and
social effects of coronavirus
State-of-play 4 June 2020
This document compiles information, obtained from public sources, on the measures proposed and taken at the EU
or Euro Area level to mitigate the economic and social effects of Covid19. It will be regularly updated, following new
developments.
The table covers, specifically:
1. Budgetary and financial support measures proposed or adopted by EU or EA institutions (Sections 1A and 1B)
2. Decisions taken by the Commission/Council/Eurogroup aiming at coordinating national economic and fiscal
policies (Section 2)
3. Monetary policy measures taken by the ECB (Section 3)
4. Measures with impact on banking and macro-prudential policies taken by the SSM, ECB and ESRB (Section 4)
5. Measures pertaining to state aid policies [taken by the European Commission] (Section 5)
Feedback and suggestions: egov@ep.europa.eu
For monetary policy measures: poldep-economy-science@europarl.europa.eu
ECONOMIC GOVERNANCE SUPPORT UNIT (EGOV) in cooperation with POLICY DEPARTMENT A
Directorate-General for Internal Policies
EN
PE 645.723 - 4 June 2020EU level measures mitigating economic, financial and social effects of coronavirus
SECTION 1A: Budgetary and financial measures as proposed by the Commission on 27 May as part of a revised MFF and
a new EU Recovery Instrument (state-of-play 04.06.2020)
Contact persons: Cristina Dias and Kajus Hagelstam (EGOV)
EU funding instruments to support the recovery
Institution/proposal Measures Objective Further observations
Commission The proposed act determines the allocation of funds to Allow the Commission to The proposed regulation establishes (a)
proposal for a different Union programmes in line with the strategy set finance itself in capital markets the total amount available (on the basis
Council Regulation out in the European Union Recovery Plan up to € 750 bn and to provide of the amended own resources decision
establishing a loans and grants (see below) and its budgetary
EU instruments and programmes to be financed include
European Union (see below): classification; (b) the modalities of
Recovery Instrument disbursing (loans and grants) and
(a) restore employment and job creation and restore
(EURI) health care systems; respective amounts; (c) policies to be
financed; (d) time limits; (e) reporting
(b) reforms and investments to reinvigorate the potential
Legal base: Article for growth, to strengthen cohesion among Member obligations (linked also to a revised
122 of TFEU 1 Interinstitutional agreement on
States and to increase their resilience;
budgetary discipline)
(c) support measures for businesses affected by the
economic impact of the pandemic, in particular such No maturities foreseen before 2028; the
measures benefitting small and medium-sized Union will bear contingent liability in
enterprises, including direct financial investment in those the form of a guarantees for debt issued
enterprises; until they are repaid (see below
(d) support measures for economically viable businesses amendments to the EU Own Resources
impacted by COVID-19 pandemic, including direct Decision)
financial investment in those businesses;
(e) measures to strengthen strategic autonomy of the
Union in vital supply chains, including direct financial
investment in businesses;
(f) support measures for research and innovation;
1
Article 122 of the Treaty on the Functioning of the European Union foresees the possibility of measures, decided in a spirit of solidarity between Member States, appropriate to the economic
situation. The present situation is unprecedented. It is characterized by severe difficulties caused by exceptional occurrences beyond the Member States’ control. Therefore, it is appropriate to
adopt under Article 122 TFEU exceptional temporary measures to support recovery and resilience across the Union.
2IPOL | Economic Governance Support Unit
(g) support measures for increasing the level of Union’s
crisis preparedness and for enabling a quick and effective
Union response in the event of major emergencies;
(h) support measures to ensure that a just transition to a
climate-neutral economy will not be undermined by the
COVID-19 pandemic;
(i) support measures to address the impact of the COVID-
19 pandemic on agriculture and rural development
Budget: € 500 billion (in 2018 prices) for non-repayable
support, repayable support through financial
instruments or for provisioning for budgetary guarantees
and related expenditure and € 250 billion (in 2018 prices)
to provide loans to Member States
Commission Establishing: Increase the headroom to allow - Commission is proposing an
proposal for - An Own Resources ceiling of 1.4% of EU gross national issuance of debt to finance Next amendment to its 2018 proposal for a
amendments to the income of both the ceiling for appropriations for Generation EU (see below), EU Own Resources Decision
Ceilings of the commitments and the ceiling for appropriations for including the EURI (see above) (COM(2018) 325)
Council decision on payments, and
- The increase of 0.6 percentage points
Own Resources - An additional temporary increase of the ceiling of 0.6 will be limited in time and will only be
percentage points (on top of the above Own Resources used in the context of the recovery from
Legal base: Article ceiling), allowing the Commission to borrow funds on the coronavirus pandemic. This
311 of TFEU behalf of the Union up to an amount of EUR 750 billion in increase in the Own Resource ceiling
2018 prices and assign the proceeds under the proposed will expire when all funds have been
EURI (see above) repaid and all liabilities have ceased to
exist
- The Commission will propose
additional own resources in the near
future (see Commission
Communication “Europe's moment:
Repair and Prepare for the Next
Generation”. The 2018 Commission
proposal referred to above already
included financing sources by new EU
own resources
3EU level measures mitigating economic, financial and social effects of coronavirus
Amendments to the current MFF and a revised 2021-2027 MFF
Institution/proposal Measures Objective Further observations
Commission Increase of the expenditure ceilings of the 2014-2020 Frontloading of financial Will require consent by the European
proposal multiannual framework for the year 2020 by 6.040 million support for provisioning of the Parliament
for a Council euro by raising: Solvency Support Instrument
Regulation - the ceiling on commitment appropriations for sub- under the European Fund for
amending the Heading 1a ‘Competitiveness for growth and jobs’ to the Strategic Investment and the
multiannual level of EUR 25 681 million (2011 prices); Union’s contribution to the
financial framework – the ceiling on commitment appropriations for sub- capital increase of the
for the years 2014- Heading 1b ‘Economic, social and territorial cohesion’ to European Investment Fund,the
2020 the level of EUR 53 109 million (2011 prices); frontloading of additional
– the ceiling on commitment appropriations for Heading cohesion spending under
Legal base: Article 4 ‘Global Europe is increased to the level of EUR 9 665 REACT-EU, and increased
312 TFEU million (2011 prices) financial means for the
European Fund for Sustainable
Development
Commission Reinforcement and adjustment to the Commission MFF Adjusting the 2018 Will require consent by the European
proposal for a proposals of May 2018, to include new facilities and Commission proposal to Parliament
revised Council programmes targeting the most pressing recovery needs, ensure the EU budget can
Appropriations necessary to cover
Regulation laying significant reinforcement to other programmes crucial to mobilise investment and coupon payments of borrowings under
down the the response, and greater flexibility frontload financial support and the EURI after 2027, and redemptions at
multiannual investment, paving the way to
maturity, will need to be provided in
financial framework a fair and inclusive transition to future multiannual financial
for the years 2021 to a green and digital future, frameworks
2027 supporting the Union’s longer-
term strategic autonomy and
Legal base: Article making it resilient to shocks in
312 TFEU the future
4IPOL | Economic Governance Support Unit
Establishing an EU Recovery and Resilience Facility
Institution/proposal Measures Objective Further observations
Commission Mechanism: Provide access to grants and loans to Enhancing cohesion in the EU - Integrated with the European
proposal for a support implementation of Member States’ national by providing financial Semester
European recovery and resilience plans defined in line with the assistance to Member States to - Replaces Commission proposals on a
Parliament and objectives of the European Semester, including in implement reforms in areas Reform Support Programme and the
Council Regulation relation to the green and digital transitions and the such as social, employment, BICC governance proposal (both
on a Recovery and resilience of national economies skills, education, research and withdrawn), whilst taking into account
Resilience Facility innovation, health, business discussions held so far
(RRF) Budget: €603 billion of which €335 billion for grants and environment, public - Financing to be frontloaded by the
€268 billion in loans administration and the financial end of 2024 with at least 60% of grants
Legal base: 175(3) sector to be committed by the end of 2022
TFEU 2 - Key performance indicators to monitor
implementation; disbursements to
follow agreed milestones
- Common Provisions Regulation of the
structural and cohesion funds to apply
Technical Support Instrument
Institution/proposal Measures Objective Further observations
Proposal for a Mechanism: Allows the Commission to provide Union Promote cohesion through Replaces the current Structural Reform
Regulation of the support in the form of (a) grants; (b) public procurement provision of support for Support Programme (Commission has
European contracts; (c) reimbursement of costs incurred by administrative capacity and redrawn the Support Reform
Parliament and external experts; (d) contributions to trust funds set up by long-term structural reforms, Programme proposed under its 2018
Council establishing international organisations; and (e) actions carried out namely those addressing MFF proposal)
a Technical Support through indirect management Country Specific
Commission to analyse requests for
Instrument Recommendations support on the basis of urgency,
Budget: EUR 864,4 billion (in current prices) for 2021 -
2027, with a possibility of adding further resources breadth and depth of problems
transferred by Member States identified, support needs in respect of
2
Article 175 (third paragraph) TFEU provides that, if specific actions prove necessary outside the Funds and without prejudice to the measures decided upon within the framework of the other
Union policies, such actions may be adopted by the European Parliament and the Council acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social
Committee and the Committee of Regions. In line with Article 175 (third paragraph) TFEU, the Recovery and Resilience Facility under the regulation is aimed to contribute to enhancing cohesion,
through measures that allow the Member States concerned to recover faster and in a more sustainable way from the COVID19 crisis, and become (more) resilient.
5EU level measures mitigating economic, financial and social effects of coronavirus
the policy area concerned, analysis of
Legal base: Articles
socioeconomic indicators and general
175(3) and 197(2) of
administrative capacity of the Member
TFEU 3
State
Next Generation EU: spending programmes benefiting from the European Union Recovery Instrument
Institution/proposal Measures Objective Further observations
Commission proposal amending Regulation (EU) No Assistance for fostering crisis Linked also to amendments to FEAD.
1303/2013 (REACT-EU) repair in the context of the
Legal base: Articles 177 and 322(1) TFEU COVID-19 pandemic and
Mechanism: Flexible cohesion policy grants for preparing a green, digital and
municipalities, hospitals, companies via Member States’ resilient recovery of the
managing authorities. No national co-financing required economy
Budget: €55 billion of additional cohesion policy funding
between 2020 and 2022. Resources for 2020 stem from
Commission an increase in the resources available for economic, social
proposals and territorial cohesion in the 2014-2020 MFF, whereas
resources for 2021 and 2022 stem from the EURI
To be in part or totally Reinforced rural development programmes (proposal Support rural areas to achieve
financed through the pending) the European Green Deal goals
European Union Legal base: the targets of Biodiversity and
Recovery Instrument Budget: €15 billion reinforcement for the European Farm to Fork strategies
(see above) Agricultural Fund for Rural Development
Commission proposal amending the Just Transition Provide means for facing the
Fund Regulation climate challenge and support
Legal base: Articles 174(1), 175(3) and 322(1) of TFEU public investments in the most
Targeted amendments to the Regulation aiming at: affected regions
- increasing its available resources;
3
Article 175 (third paragraph) TFEU provides that, if specific actions prove necessary outside the Funds and without prejudice to the measures decided upon within the framework of the other
Union policies, such actions may be adopted by the European Parliament and the Council acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social
Committee and the Committee of Regions. Article 197(2) TFEU provides that the Union may support the efforts of Member States to improve their administrative capacity to implement Union law,
inter alia, through facilitating the exchange of information and supporting training schemes. No Member State shall be obliged to avail itself of such support. The European Parliament and the
Council, acting under the ordinary legislative procedure are to establish the necessary measures to this end, excluding any harmonisation of the laws and regulations of the Member States. In view
of Articles 175 and 197 TFEU, the regulation is aimed at enhancing cohesion, through measures that allow recovery, resilience and convergence in/of the Member States concerned.
6IPOL | Economic Governance Support Unit
- no obligation to complement these additional
resources with transfers from ERDF and ESF; and
- Amending Annex I to cater for the higher level of
resources proposed
Budget: additional € 35 613 048 000 (in current prices).
Of these, € 2 810 048 000 in current prices from 2021-
2027 MFF (bringing the level of the programme under
the next MFF to € 11 270 459 000); remaining additional
resources of € 32 803 000 000 to cover the period from
2021 to 2024 stemming from the EURI
Commission proposal for a European Parliament and Provide means for facing the To be adopted under the ordinary
Council Regulation on the public sector loan facility climate challenge and support legislative procedure by Council and
under the Just Transition Mechanism public investments in the most the European Parliament
Legal base: Articles 174(1), 175(3) and Article 322(1) of affected regions
The public sector loan facility
TFEU constitutes the third pillar of the Just
Mechanism: grants from the EU budget and loans (from Transition Mechanism (the two other
financing partners, namely the EIB) to assist Member pillars being the Just Transition Fund
States in accelerating the transition towards climate and a dedicated Just Transition scheme
neutrality under InvestEU)
Budget: grant component of EUR 1.525 billion (for 2021-
2027), of which € 250 000 000 from the 2021-2027 MFF The amount of the grant shall not
and € 1 275 000 000 from the EURI exceed 15% of the amount of the loan
provided but for projects located in
territories in NUTS level 2 regions with a
GDP per capita not exceeding 75% of
the average GDP of the EU-27, the
amount of the grant shall not exceed
20% of the amount of the loan provided
by the finance partner
Commission proposal for a European Parliament and - Supporting key sectors and - To be adopted by Council and
Council Regulation establishing a Solvency Support technologies in Member States Parliament through ordinary legislative
Instrument and sectors most affected, thus procedure (as an amendment to
(29.05.2020) counteracting distortion effects Regulation 2015/1017 (EFSI regulation)
Legal base: Articles 172 and 173, the third paragraph of caused by covid-19 national Financing to be frontloaded through
Article 175 and Article 182(1) of TFEU responses the amendment to the 2014-2020 MFF;
EUR 28bn reserved from EURI
7EU level measures mitigating economic, financial and social effects of coronavirus
Mechanism: Provisioning of an EU budget guarantee - Solvency support for viable Financing and investment operations
under the EFSI regulation to the European Investment companies should be decided upon until end-2024
Bank Group in order to mobilise private capital with at least 60 % of financing and
EU budget provisioning: €33,2 billion (increasing the investment operations to be decided by
EFSI guarantee to EUR 42,3 billion); aim is to mobilise EUR end-2022
300 bn in equity financing Financial Regulation to apply, including
provisions relating to the protection of
the rule of law
Commission proposal to strengthened InvestEU Mobilising investment to Financing to be frontloaded through
programme and Strategic Investment Facility support the recovery and long- the amendment to the 2014-2020
Legal base: Articles 173 and 175(3) of TFEU term growth, including a new MFFThe proposal reinforces the 2018
Mechanism: Provisioning of budget guarantee facility to promote investments InvestEU proposal. It is complementary
Budget: budgetary framework (commitments in current in strategic European value to the Solvency Support Instrument
prices) of € 33 524 733 000, of which € 33 000 440 000 chains under the EFSI but will focus on long
made available through the EURI. The participation of the term investments to support EU policy
Union in a possible forthcoming capital increase (in one goals
or more rounds) of the EIF will need a financial envelope
of up to € 900 000 000 in the MFF 2021-2027
Commission proposal for EU4Health - strengthen Programme should support The proposed Regulation establishes
health security and prepare for future health crises coordinated public health the EU4Health Programme and lays
(28.05.2020) measures at Union level to down the objectives of the Programme,
Legal base: Article 168(5) of TFEU address different aspects of its budget for the period from 1 January
Budget: € 10 397 614 000 (in current prices) for the such threats 2021 to 31 December 2027, the forms of
2021-2027 period; € 1 946 614 000 from 2021-2027 MFF Union funding of the Programme and
and € 8 451 000 000 from the EURI the rules for providing such funding
Regulation (EU) No 282/2014 is
repealed
Commission proposal for amending European Ensure a better crisis and
Parliament and Council Decision No 1313/2013/EU emergency support to EU
on a Union Civil Protection Mechanism (rescEU) citizens in Europe and beyond
(02.06.2020)
Legal base: Articles 196 and 322(1)(a) of TFEU
Budget: € 3 455 902 000 (in current prices) for the 2021-
2027 period, of which € 1 268 282 000 from 2021-2027
MFF and € 2 187 620 000 from the EURI
8IPOL | Economic Governance Support Unit
Targeted amendments aiming at:
- Reinforce preparedness approach, including
establishing a baseline and planning elements at a
European level,
- Ensure that the Commission is able to directly procure
an adequate safety net of rescEU capacities;
- Provide the Commission with the logistical capacity to
provide multi-purpose air services and to ensure timely
transport and delivery of assistance;
- design a more flexible system for response to large-
scale emergencies;
- enhance the Emergency Response Coordination
Centre’s operational coordination and monitoring role;
- enable stronger investment in preparedness at Union
level and further simplification of budget
implementation;
- enable the implementation of recovery and resilience
measures under the Union Civil Protection Mechanism
Commission proposal for a European Parliament and Reinforce the support that the
Council Regulation on Humanitarian Aid EU can provide in cases of
Legal base: Article 214(3) of TFEU humanitarian needs, ensuring
Budget: € 5 468 000 000 (in current prices) from the EURI the availability of additional
resources over and above the
MFF 20212027 amounts
9EU level measures mitigating economic, financial and social effects of coronavirus
Commission proposals for reinforced EU The recovery and resilience measures
programmes for research, innovation and external under the ERI will be carried out
action through also under a number of specific
Legal base(s): Articles 43(2), 173(3), 182(1) and (4), 183, Union programmes. Therefore, the
188, 209, 212 of TFEU Commission proposes to amend:
Budget: a total of € 14 647 million for the Horizon Europe - the Framework Programme for
(the Framework Programme for Research and Research and Innovation and its
Innovation), a total of € 16 483 million for the European implementing Specific Programme
Agricultural Fund for Rural Development and a total of € Horizon Europe,
11 448 million for the increase of the External action – the Neighbourhood, Development
guarantee under the Neighbourhood, Development and and International Cooperation
International Cooperation Instrument to be made Instrument
available through the EURI – the European Agricultural Fund for
Rural Development
10IPOL | Economic Governance Support Unit
SECTION 1B: Budgetary and financial measures as proposed and/or adopted before the Commission proposals of 27
May 2020 (state-of-play 04.06.2020)
Institution Measures Objective Further observations
Eurogroup Establishment of the European Stability Mechanism Grant a precautionary credit After completion of national
Pandemic Crisis Support (PCS). The available sum, up line to euro area MS at procedures, the PCS was made
Pandemic Crisis to 2% of the requiring Member State’s 2019 GDP, will be favourable conditions. The operational on 15 May by the ESM
Support (PCS), based available until December 2022. The requiring Member credit line can be drawn in cash Board of Governors (see ESM explainer).
on the existing ESM States would remain committed to “strengthen economic (loan) or by ESM purchase of See also EGOV briefing
Enhanced Conditional and financial fundamentals, consistent with the EU bonds issued by the Member
Credit Line economic and fiscal coordination and surveillance States on the primary market.
frameworks, including any flexibility applied by the
competent EU institutions”.
Commission (2 April) Proposal for a Council Regulation, based on art 122 TFEU, Establish a fund, with Agreement in Council on 19 May.
setting up a new instrument for temporary Support to guarantees by all EU Member Council to be informed when the
Legislative proposal mitigate Unemployment Risks in an Emergency States, to provide loans to MSs. instrument becomes available (see
for SURE (SURE). EGOV briefing for details)
The SURE fund: Published in the Official Journal of 19
- can borrow on financial markets up to 100 bn euro; May as Council Regulation (EU)
- It will provide back-to-back loans to MSs (with no pre- 2020/672
allocated amounts), which must be used by Member
States to finance short-time work schemes for employees
or similar measures for the self-employed;
Commission will manage the disbursements, after
approval by Council
European Creation of a €25 billion “Pan-European Guarantee The 27 EU Member States have The Board of Governors of the EIB
Investment Bank (16 Fund” to enable the EIB Group to scale up its support for been invited to contribute to agreed on 26 May the structure and the
April 2020) companies in all 27 EU Member States by up to €200 the Fund, with a share of the functioning of the Fund.
billion. €25 billion equal to their share
EU leaders endorsed it on 23 April.
of EIB capital.
The Fund will become operational as
soon as Member States accounting for
at least 60% of EIB capital have signed
their contribution agreements and a
11EU level measures mitigating economic, financial and social effects of coronavirus
Contributors Committee has been set
up.
Commission (2 April) Amendment to the European Regional Development - Provide flexibility through Council final adoption on 22 April.
Fund Regulation (Regulation 1301/2013) and the transfer possibilities across the
Adopted by the EP at its plenary
Coronavirus Response Common Provision Regulation (Regulation 1303/2013). three cohesion policy funds meeting of 16 and 17 of April
Initiative Plus (CRII (the European Regional
Plus) Development Fund, European
Social Fund and Cohesion
Fund); transfers between the
different categories of regions;
and also through flexibility
when it comes to thematic
concentration;
- Allow for a 100% EU co-
financing rate for cohesion
policy programmes for the
accounting year 2020-2021;
- Simplify procedural steps
linked to programme
implementation, use of
financial instruments and audit.
Commission (13 The Regulation amends three Regulations related to the Facilitate the use of 8bn (MS’s On 30 March, the Council adopted the
March 2020) EU Structural funds, namely: return) +29bn (still available measures which are in force since April
- The European Regional Development Fund fund for 2020) = 37 bn euro 1st.
Proposal for a
Regulation (Regulation 1301/2013), by clarifying that already earmarked in the MFF
Regulation on COVID- On 26 March, the plenary meeting of
the Fund may support SMEs and set Research and 2013-2020. European Parliament adopted its
19 Response
Technological Development as priority.
Investment Initiative position on the new measures.
- The Common Provision Regulation (Regulation
(CRII)
1303/2013) which sets the general rules for all the EU
funds. By changing the rules, the Commission
facilitates the use of 37 bn already earmarked for the
EU structural funds.
- The EU Maritime and Fishery Fund Regulation
(Regulation 508/2014), by allowing to use the fund to
cover losses due to a public health crisis.
12IPOL | Economic Governance Support Unit
Commission (2 April) Amendment to the current MFF regulation (linked to a Mobilisation of special Adopted by EP Plenary on 16-17 April.
draft amendment to the 2020 EU budget and proposal instruments to release funds for Council adopted its position on 14 April.
New Solidarity
for mobilisation of the Contingency Margin in 2020) an Emergency Support
Instrument:
Instrument (in an amount of 2.7 Eurogroup of 9 April welcomed the
Emergency Support proposals (point 14) and urged Member
bn euro) that provides grants to
Instrument States to find ways of reinforcing the
MSs
firepower of the instrument.
Council final adoption (tbc).
Commission (13 The Regulation amends the Regulation governing the EU Facilitate the provision of up to On 30 March, the Council adopted the
March 2020) Solidarity Fund, by enlarging its scope to public health 100 mn to each MSs as measures.
crisis. 800 mn euro are available in 2020. advanced payments within the
Proposal for a On 26 March, the plenary meeting of
Fund. Total available amount:
Regulation to provide Funds are available also to accession Countries. European Parliament adopted its
800 mn.
financial assistance to position on the new measures.
Member States and
countries negotiating
their accession to the
Union seriously
affected by a major
public health
emergency
Commission (8 May) Proposal to postpone the entry into force of two EU Reduce administrative burden - Parliament and Council have been
taxation measures – of the VAT e-commerce package by informed to proceed discussions
6 months and certain deadlines for filing and exchanging - The VAT e-commerce package will
Press release
information under the Directive on Administrative apply as of 1 July 2021 instead of 1
Cooperation (DAC) January 2021; for DAC Member States
will have 3 additional months to
exchange information on financial
accounts of which the beneficiaries are
tax residents in another Member State
and on certain cross-border tax
planning arrangements
Commission (3 April Decision to waive VAT and import duties for goods Reduce financial burden in Member States need to inform the
2020) needed to combat the effects of the COVID-19 outbreak acquiring from third countries Commission on:
(from 30 January 2020 to 31 July 2020). medical equipment. (a) nature and quantities of the various
Decision
goods admitted free of import duties
13EU level measures mitigating economic, financial and social effects of coronavirus
and VAT, (b) of the organisations
approved for the distribution or making
available of those goods, (c) of the
measures taken to prevent the goods
from being used for purposes other
than to combat the effects of the
outbreak
Commission and The European Commission unlocked €1 billion from the Provision of guarantees up to 8 SMEs will be able to apply directly to
European European Fund for Strategic Investments that will servebillion euro that would allow their local banks and lenders
Investment Fund as a guarantee to the European Investment Fund (EIF). banks to provide liquidity to participating in the scheme, which will
(EIF) This will allow the EIF to issue special guarantees to SMEs. be listed on www.access2finance.eu
(6 April) incentivise banks and other lenders to provide liquidity
to at least 100,000 European SMEs and small mid-cap
companies hit by the economic impact of the
coronavirus pandemic, for an estimated available
financing of €8 billion.
European EIB Group offers support to European companies under 40 bn euro potential financing Decided by EIB.
Investment Bank strain from the coronavirus pandemic and its economic
On 3 April, the EIB Board approved a
(16 March 2020) effects. Potential financing of up to EUR 40 billion can be
“multi-beneficiary intermediated loan”
mobilised at short notice, backed up by guarantees from
of EUR 5bn covering all EU MSs, as part
the European Investment Bank Group and the European
of its emergency response package
Union budget. Extra funding is available for healthcare
which aims to rapidly mobilise
sector for emergency infrastructure and development of
financing for SMEs and Midcaps in the
cures and vaccines.
coming weeks up to EUR 40bn.
European Bank for The EBRD has unveiled an emergency €1 billion 1 bn euro (increased to 21 bn on Among countries assisted by the EBRD
Reconstruction and “Solidarity Package” of measures to help companies 28 April) there are several EU countries
Development (EBRD) across its regions deal with the impact of (complete list here)
(13 March 2020) the coronavirus pandemic. Under the emergency
programme, the EBRD will set up a “resilience
framework” to provide financing for existing EBRD clients
with strong business fundamentals experiencing
temporary credit difficulties.
The proposals were approved by shareholders of the
EBRD, which invests to support the development
especially of the private sector across 38 emerging
economies.
14IPOL | Economic Governance Support Unit
SECTION 2: Dealing with the coronavirus – Surveillance and coordination of national economic and fiscal measures
(state-of-play 04.06.2020)
Contact persons: Jost Angerer and Kristina Grigaite (EGOV)
The European Semester and the activation of the escape clause of the Stability and Growth Pact (SGP)
Institution Measures Objective Adoption procedure
Commission (20 May) Commission proposed the 2020 Country Specific To support Member States to take all The Council is expected to
Recommendations (CSRs) for all EU Member States necessary measures to effectively adopt the recommendations
taking due account of the pandemic and the need to address the pandemic, sustain the in July (for an overview of the
support economic recovery. economy and support the recovery. draft CSRs, see separate
EGOV document)
While the Commission adopted Excessive Deficit
Procedure reports under Article 126(3) of the Treaty for EDP-Regulation (No
all Member States (except Romania, which is already in 1467/97), Article 3 stipulates:
the corrective arm of the Pact), in which it identifies that 1. Within two weeks of the
all Member States (except Bulgaria) do not comply with adoption by the Commission
the deficit criterion (and some also not with the debt of a report issued in
criterion), it considers - in light of the pandemic - that at accordance with Article
this juncture a decision on whether to place Member 126(3), the Economic and
States under the EDP should not be taken. Financial Committee shall
formulate an opinion in
accordance with Article
126(4).
2. Taking fully into account
the opinion referred to in
paragraph 1, the
Commission, if it considers
that an excessive deficit
exists, shall address an
opinion and a proposal to
the Council in accordance
with paragraphs 5 and 6 of
Article 126 TFEU and shall
inform the European
Parliament thereof.
15EU level measures mitigating economic, financial and social effects of coronavirus
Council (ECOFIN) Ministers agreed on the simplification of information To preserve the European Semester's For an overview of the 2020
(23 March and 16 April) requirements for this year's cycle of the European main milestones, while taking into National Reform
Semester. account the challenging times Member Programme and Stability or
Given the high degree of uncertainty as a result of the States are facing. Convergence Programmes,
socio-economic fallout of the COVID-19 pandemic, the see Commission’s website:
Commission has put forward a simplified process for this
The Commission expects to
year's European Semester exercise. In particular, there present its 2020 country
would be a streamlined approach for the submission of specific recommendations
national reform and stability or convergence on 20 May.
programmes (NRPs and SCPs) by Member States.
Commission (20 The activation of the general escape clause of the SGP The use of the clause will ensure the Proposed by Commission on
March) to allow Member States to undertake budgetary needed flexibility to take all necessary 20 March
measures to deal adequately in times of severe economic measures for supporting the Member
Endorsed by the Council on
Council (23 March) downturn, within the procedures of the SGP. States’ health and civil protection
23 March
systems and to protect the Member
The general escape clause does not suspend the
Eurogroup (9 April) States’ economies, including through Leaders welcomed the
procedures of the SGP. It will allow the Commission and activation of the clause in
further discretionary stimulus and
the Council to undertake the necessary policy their statement of 27 March.
coordinated action, designed, as
coordination measures within the framework of the Pact,
appropriate, to be timely, temporary and On 9 April, the Eurogroup
while departing from the budgetary requirements that
targeted, by Member States. reiterated the flexibility in
would normally apply.
the EU rules agreed on 23
March 2020 and informed
that overall fiscal guidance
will be provided within the
EU fiscal framework and as
part of a streamlined
European Semester exercise.
Coordination of Euro Area Member States economic policies
Institution Measures Objective Adoption procedure
Eurogroup (24 March (...) We agreed on the imperative to implement and scale up The Eurogroup is committed to explore all EU Leaders (26 March) took
2020) our agreed actions to support our citizens and businesses. possibilities necessary to support our note of the progress made
This strategy includes further discretionary stimulus and economies get through these difficult by the Eurogroup.
Letter by the President coordinated action, designed, as appropriate, to be timely, times. This involves all our institutions.
of the Eurogroup temporary and targeted.
16IPOL | Economic Governance Support Unit
The aggregate amount of Member States’ discretionary
fiscal measures increased twofold to close to 2% of Euro
Area GDP, while liquidity support schemes for firms and
workers have been scaled up to more than 13% of Euro Area
GDP, up from 10%. This is a clear increase in our fiscal
response.
Eurogroup (16 March Member States will implement: Member States will be allowed to carry Implementation at national
2020) • Immediate fiscal spending targeted at containment out health care expenditures and level
and treatment of the disease. targeted relief measures for firms and
Statement • Liquidity support for firms facing severe disruption workers to address the economic impact
and liquidity shortages, especially SMEs and firms in of the coronavirus. Their impact on public
severely affected sectors and regions, including finances will not be considered by the
transport and tourism – this can include tax Commission and the Council as breaches
measures, public guarantees to help companies to of the EU fiscal rules.
borrow, export guarantees and waiving of delay
penalties in public procurement contracts;
• Support for affected workers to avoid employment
and income losses, including short-term work
support, extension of sick pay and unemployment
benefits and deferral of income tax payments.
Automatic stabilisers will fully play their role. This means
that automatic revenue shortfalls and unemployment
benefit increases resulting from the drop in economic
activity will not affect compliance with the applicable
fiscal rules, targets and requirements.
17EU level measures mitigating economic, financial and social effects of coronavirus
SECTION 3: Dealing with the coronavirus - ECB monetary policy (state-of-play on 04.06.2020)
Contact persons: Drazen Rakic (Policy Department A)
Institution Measures Objective Further observations
Interest rate policy
ECB Key interest rates remain Forward guidance: Key ECB interest rates to remain at their present or
Regular unchanged: lower levels until inflation outlook robustly converge to a level
Governing − main refinancing sufficiently close to, but below, 2% within its projection horizon, and
Council meeting operations: 0.00%; such convergence has been consistently reflected in underlying
(12 March 2020) − marginal lending facility: inflation dynamics.
0.25%;
− deposit facility: -0.50%.
Asset purchase programmes
ECB Pandemic Emergency Purchase Support favourable - The purchases will continue to be conducted in a flexible manner
Extraordinary Programme (PEPP) increased to EUR financing conditions for over time, across asset classes and among jurisdictions. This allows
Governing 1350 billion. the private and public the Governing Council to effectively stave off risks to the smooth
Council meeting sectors. transmission of monetary policy.
(4 June 2020) - The horizon for net purchases under the PEPP will be extended to at
least the end of June 2021. In any case, the Governing Council will
conduct net asset purchases under the PEPP until it judges that the
coronavirus crisis phase is over.
- The maturing principal payments from securities purchased under
the PEPP will be reinvested until at least the end of 2022.
ECB New Pandemic Emergency Purchase Support favourable - Together with the additional envelope of EUR 120 billion, this
Extraordinary Programme (PEPP) of EUR 750 financing conditions for represents 7.3% of euro area GDP or about 32% of cumulative net
Governing billion. the private and public purchases under the asset purchase programme (APP) since 2015.
Council meeting sectors. - Purchases will be conducted until the end of 2020 and will include
(18 March 2020) all the asset categories eligible under the existing APP. A waiver of the
eligibility requirements for securities issued by the Greek government
will be granted for purchases under PEPP.
- For the purchases of public sector securities, the benchmark
allocation across jurisdictions will continue to be the capital key of the
national central banks. At the same time, PEPP purchases will be
conducted in a flexible manner, allowing for fluctuations in the
18IPOL | Economic Governance Support Unit
distribution of purchase flows over time, across asset classes and
among jurisdictions.
- Issuer limits will not apply to the PEPP. For more specific details on
the PEPP see ECB Decision of 24 March 2020.
- The Governing Council is fully prepared to increase the size of the
PEPP and adjust its composition, by as much as necessary and for as
long as needed, as was announced by the ECB on 30 April 2020.
Expansion of the range of eligible - CSPP eligibility expanded to non-financial commercial paper,
assets under the corporate sector making all commercial papers of sufficient credit quality eligible for
purchase programme (CSPP). purchase under CSPP.
Strengthened forward guidance on - The Governing Council is fully prepared to increase the size of its
the APP. asset purchase programmes and adjust their composition, by as much
as necessary and for as long as needed. It will explore all options and
all contingencies to support the economy through this shock.
- The Governing Council will consider revising some self-imposed
limits to the extent necessary.
ECB Temporary envelope of additional Support favourable Forward guidance: Net asset purchases to run for as long as necessary
Regular net asset purchases of EUR 120 financing conditions for to reinforce the accommodative impact of policy rates, and to end
Governing billion (until year-end, in addition to the real economy. shortly before the Governing Council starts raising the key ECB
Council meeting the existing net asset purchases of interest rates.
(12 March 2020) EUR 20 billion per month under the
APP).
Continuing reinvestments of the - To be kept past the date when the ECB starts raising the key ECB
principal payments from maturing interest rates, and in any case for as long as necessary to maintain
securities purchased under the APP, favourable liquidity conditions and an ample degree of monetary
in full. accommodation.
Long-term refinancing programmes
ECB Reduced interest rate for TLTRO III Support bank lending (in - 50 basis points below the average rate applied in the Eurosystem’s
Regular outstanding operations from June particular lending to main refinancing operations; and
Governing 2020 to June 2021. SMEs). - As low as 50 basis points below the average interest rate on the
Council meeting deposit facility to institutions reaching benchmark levels of lending.
(30 April 2020) - For more details, please refer to a dedicated press release.
Introduced a new series of non- Liquidity support and - Will consist of seven additional refinancing operations commencing
targeted pandemic emergency support smooth in May 2020 and maturing in a staggered sequence between July and
longer-term refinancing operations functioning of money September 2021 in line with the duration of the collateral easing
(PELTROs) market funds (by measures.
19EU level measures mitigating economic, financial and social effects of coronavirus
providing liquidity - Carried out as fixed rate tender procedures with full allotment.
backstop). - Interest rate that is 25 basis points below the average rate on the
main refinancing operations prevailing over the life of each PELTRO.
- For more details, please refer to a dedicated press release.
ECB Additional longer-term refinancing Liquidity support. - Aim to bridge the period until the TLTRO III operation in June 2020.
Regular operations (LTROs). - Carried out through a fixed rate tender procedure with full allotment.
Governing - Interest rate that is equal to the average rate on the deposit facility
Council meeting over the life of the operation (all operations mature on 24 June 2020).
(12 March 2020) Specific ECB press release provides additional details and specifically
refers that the ECB is ready to provide additional liquidity if needed.
Reduced interest rate for TLTRO III Reduced interest rate for Support bank lending (in particular lending to SMEs).
outstanding operations from June TLTRO III outstanding - As low as 25 basis points below the average interest rate on the
2020 to June 2021. operations from June deposit facility to institutions reaching benchmark levels of lending.
2020 to June 2021.
Further easing of conditions for Support bank lending (in - Increase to 50% (from 30%) of their stock of eligible loans as at 28
TLTRO III. particular lending to February 2019 for all future TLTRO III operations.
SMEs). - Bid limit (10% of the stock of eligible loans) per operation removed
on all future operations.
- Lending performance threshold reduced to 0% (from 2.5%) in the
period between 1 April 2020 and 31 March 2021.
Additional details can be found in an ECB press release.
Collateral framework
ECB Further collateral easing measures Mitigate impact of - Collateral eligibility “freeze” - assets meeting minimum credit
Governing related to eligibility (rating) possible rating quality requirements for collateral eligibility on 7 April 2020 (BBB-,
Council decision downgrades on collateral except asset-backed securities (ABSs)) will continue to be eligible in
(22 April 2020) availability case of rating downgrades, as long as their rating remains at or
above BB).
- ABSs – those eligible under the general framework (rating of A-) will
be grandfathered as long as their rating remains at or above BB+.
- Measures will remain in place until September 2021.
ECB Package of temporary collateral Support the provision of - Temporary general reduction of collateral valuation haircuts by 20%.
Governing easing measures (linked to the bank lending by easing - Temporary extension of the ACC framework, composed of i)
Council decision duration of the PEPP) the conditions at which inclusion of government and public sector guaranteed loans to
(7 April 2020) credit claims are corporates, SMEs, self-employed individuals and households in the
accepted as collateral requirements on guarantees; ii) extension of scope of acceptable
and increasing the
20IPOL | Economic Governance Support Unit
Eurosystem’s risk
credit assessment systems; and iii) reduction of the loan level
tolerance to support the reporting requirements.
provision of credit via its
- Other temporary measures: i) lowering the level of the minimum size
refinancing operations. threshold for domestic credit claims to EUR 0 (from EUR 25 000); ii)
increase in the maximum share of unsecured debt instruments that
can be used as collateral to 10% (from 2.5%); and iii) waiver of
minimum credit quality requirements for Greek government bonds in
order to accept them as collateral.
Permanent reduction of collateral For those type of assets, 20% reduction (on top of the temporary
haircuts on non-marketable assets general haircut reduction).
ECB Adopted a package of temporary Ensure that - Temporarily increased risk tolerance level and reduced collateral
Extraordinary collateral easing measures to counterparties can valuation haircuts by a fixed factor of 20%.
Governing facilitate the availability of eligible continue to make full use - Eased the conditions for the use of credit claims as collateral.
Council meeting collateral and temporarily increased of refinancing - Issued waiver to accept Greek sovereign debt instruments as
(18 March 2020) risk tolerance level. operations. collateral in Eurosystem credit operations.
- Forward looking guidance: ECB will assess further measures to
temporarily mitigate the effect on counterparties’ collateral
availability from rating downgrades.
ECB Easing collateral standards by Ensure that - Expansion of the scope of Additional Credit Claims (ACC) to include
Extraordinary adjusting the main risk parameters counterparties can claims related to the financing of the corporate sector.
Governing of the collateral framework. continue to make full use
Council meeting of refinancing
(18 March 2020) operations.
ECB Investigate ways of easing collateral
Regular requirements.
Governing
Council meeting
(12 March 2020)
Swap lines
ECB ECB and Bulgarian National Bank set FX liquidity support. - Precautionary currency agreement (swap line) to provide euro
Press release up swap line to provide euro liquidity.
(22 April 2020) liquidity - The Bulgarian National Bank will be able borrow up to EUR 2 billion
from the ECB in exchange for Bulgarian levs.
- The maximum maturity for each drawing will be 3 months.
- To remain in place until 31 December 2020, unless it is extended.
21EU level measures mitigating economic, financial and social effects of coronavirus
ECB ECB and Hrvatska narodna banka FX liquidity support - Precautionary currency agreement (swap line) to provide euro
Press release (Croatian National Bank) set up swap liquidity to Croatian financial institutions in order to address possible
(15 April 2020) line to provide euro liquidity market dysfunction.
- The Croatian National Bank will be able borrow up to EUR 2 billion
from the ECB in exchange for Croatian kuna.
- The maximum maturity for each drawing will be 3 months.
- To remain in place until 31 December 2020, unless it is extended.
ECB ECB and Denmark’s Nationalbank FX liquidity support. - Purpose is to provide euro liquidity to Danish financial institutions.
Press release have reactivated a currency swap - Activated as of 20 March 2020 and to remain in place for as long as
(20 March 2020) line. needed.
- Size of swap line was increased from EUR 12 billion to EUR 24 billion.
ECB ECB and other major central banks 4 FX liquidity support. - ECB and other major central banks to increase the frequency of 7-
Press release enhanced the US dollar operations day maturity operations from weekly to daily.
(20 March 2020) (the previous agreement was - New frequency effective as of 23 March 2020, to remain in place for
announced on 15 March 2020). as long as appropriate to support smooth functioning of US dollar
funding markets.
- Operations with 84-day maturity continue to be offered weekly.
ECB ECB and other major central banks 5 FX liquidity support. - Pricing of all US dollar operations to be lowered to USD overnight
Press Release to offer weekly US dollar operations index swap (OIS) rate plus 25 basis points.
(15 March 2020) with 84-day maturity (in addition to - New pricing and additional operations effective as of the week of 16
existing 1-week operations). March, to remain in place for as long as appropriate to support
smooth functioning of US dollar funding markets.
4
Bank of Canada, Bank of England, Bank of Japan, Federal Reserve, and Swiss National Bank.
5
Bank of Canada, Bank of England, Bank of Japan, Federal Reserve, and Swiss National Bank.
22IPOL | Economic Governance Support Unit
SECTION 4: Dealing with the coronavirus - Banking Union (state-of-play 04.06.2020)
Contact persons: Cristina Dias, Kristina Grigaite, and Marcel Magnus (EGOV)
Institution Measures Objective Further observations
European The Commission proposed exceptional temporary measures Proposed banking The package is composed of an interpretative
Commission to alleviate the immediate impact of Coronavirus-related package changes are communication and proposal for a regulation
(28/04/2020) developments, by adapting the timeline of the application aimed at facilitating bank amending Regulations (EU) No 575/2013 and
of international accounting standards (IFRS9) on banks' lending to support the (EU) 2019/876
capital, by treating more favourably public guarantees economy and help The European Parliament and the Council still
granted during this crisis, by postponing the date of mitigate the economic have to approve the proposed legislative
application of the leverage ratio buffer (previously impact of the measures.
envisaged to come into force 27 June 2021) and by Coronavirus. More information is provided in Commission
modifying the way of excluding certain exposures from the Q&A section.
calculation of the leverage ratio. The Commission also
proposes to advance the date of application of several
agreed measures that incentivise banks to finance
employees, SMEs and infrastructure projects (related to
implementation of Basel III).
ECB Banking - Provided temporary relief for capital requirements for Aims to maintain banks’ Reduced the qualitative market risk multiplier,
Supervision market risk. ability to provide market which is set by supervisors and is used to
(SSM) - ECB to review decision after six months. liquidity and to continue compensate for the possible underestimation
(16/04/2020) market-making activities by banks of their capital requirements for
market risk.
Single Provided additional clarity on the SRB’s approach to Ensure regulatory
Resolution minimum requirements for own funds and eligible liabilities consistency
Board (SRB) (MREL)
(08/04/2020)
European Provided more detailed guidance on the criteria to be Ensure regulatory The EBA sees the payment moratoria as
Banking fulfilled by legislative and non-legislative moratoria applied consistency effective tool to address short-term liquidity
Authority (EBA) before 30 June 2020 in order to avoid the classification of difficulties and clarified that payment moratoria
(02/04/2020) exposures under the definition of forbearance or as default do not trigger classification as forbearance or
under distressed restructuring. distressed restructuring.
SRB Postponed less urgent information or data requests related Reduce operational Letter sent to banks under SRB remit.
(01/04/2020) to the upcoming 2020 resolution planning cycle and stand burden
ready to address any further issues in relation to specific
23EU level measures mitigating economic, financial and social effects of coronavirus
requirements on an individual basis. Committed to take into
consideration current situation when making the decision
on future build-up on MREL.
EBA Provided additional clarification regarding its expectations Ensure regulatory
(31/03/2020) in relation to dividend and remuneration policies, provided consistency and support
additional guidance on how to use flexibility in supervisory lending into the real
reporting and recalled the necessary measures to prevent economy
money laundering and terrorist financing (ML/TF)
ECB Banking Recommendation to refrain from dividend payments and Retain funds to allow - ECON political coordinators issued a
Supervision share buybacks banks to better support statement to that effect on 27 March 2020 that
(27/03/2020) the economy also includes bonuses, though
- ECB Recommendation is to henceforth make
no irrevocable commitments for 2019 and 2020
dividends
- institutions faced with mandatory dividend
distributions to contact the SSM
- Addressed to significant institutions and to
national competent authorities to prevent
distributions also by less significant institutions
EBA Provided additional clarification on the prudential Ensure consistency and ESMA also published guidance on accounting
(25/03/2020) framework in relation to the classification of loans in default, comparability in risk implications of the economic support.
the identification of forborne exposures, and their metrics
accounting treatment.
EBA also insisted that institutions ensure adequate
consumer protection and asked payment institutions to
increase availability of contactless payments.
ECB Banking Flexibility in addressing NLPs through (a) classification of Further details given in ECB FAQs
Supervision loans backed by public support measures (b) preferential
(20/03/2020) prudential treatment of NPLs backed by public support
(directly measures in terms of supervisory expectations about loss
supervised provisioning (c) flexibility on implementation of NPL
entities) reduction strategies
Recommendation to avoid procyclical assumptions in
provisioning
Recommendation to adopt transitory regime on IFRS 9
24IPOL | Economic Governance Support Unit
ECB Banking Unwind of capital buffers (Banks can fully use capital and Capital relief (not to be Measures to be enhanced by the appropriate
Supervision liquidity buffers, including Pillar 2 Guidance) 6 used in dividends or relaxation of the countercyclical capital buffer
(12/03/2020) earnings distribution) (CCyB) by the national macroprudential
(directly authorities
supervised Relief in the composition of capital for Pillar 2 Requirements Capital relief (not to be Brings forward a measure scheduled to come
7
entities) used in dividends or into effect in January 2021, as part of the latest
earnings distribution) revision of the Capital Requirements Directive
Majority of (CRD V)
national Rescheduling of on-site inspections, 6 month extension of Reduce operational Bilaterally adjusting timetables, processes and
supervisory deadlines for remedial actions required by TRIM and SREP burden deadlines to implement supervisory measures
authorities inspections (namely in dealing with NPLs strategies)
mirrored the
measures to the
financial
institutions
directly under
their remit.
EBA Postponement of the stress tests to 2021 Allow banks to On 25/03/2020 EBA extended deadlines to
(12/03/2020) concentrate on provide data on funding plans and the QIS
operational continuity exercise
National competent authorities to use flexibility already
existent in current regulations 8
ECB Banking Called directly supervised entities to consider and address Contingency planning Joint supervisory teams should be informed
Supervision potential pandemic risk in their contingency strategies recommendations about in case significant shortfalls are identified
(03/03/2020) (business continuity plans) address both banks’ own or in case of any significant developments
limitations as well as
- Majority of
those of outside service
national
providers that may be
supervisory
affected
6 Banks allowed to operate temporarily below the level of capital defined by the Pillar 2 Guidance (P2G), the capital conservation buffer (CCB) and the liquidity coverage ratio
(LCR).
7 Banks authorised to use capital instruments that do not qualify as Common Equity Tier 1 (CET1) capital, for example, Additional Tier 1 or Tier 2 instruments, to meet the Pillar 2
Requirements (P2R).
8 In particular addressing the issues covered by ECB actions - using capital and liquidity buffers, composition of pillar II requirements, flexibility in dealing with supervisory
measures
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