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Info IEB. Banking and Covid-19. Number 35. April 2020

The Barcelona Institute of Economics (IEB) has published the third of its analyses on the impact of Covid-19. In the latest Info IEB revolves around banking, authored by Antoni Garrido Torres, Professor of Economics at the University of Barcelona (UB). The author observes at the onset that European banks currently maintain much higher liquidity and capital levels than they had before the financial crisis. Moreover, in anticipation of market tensions, the ECB has adopted a package of measures that will inject more liquidity and capital into the system, which is fundamental at the moment. The big question is if these measures will ensure sufficient funding in the eurozone, which will depend heavily on the duration of the crisis. Given this, it should not be ruled out that more heterodox measures, such as deficit monetisation, should be taken.