Odd Lots The ECB’s Former Vice-President Explains The Historic Step That Europe Just Took
Aug 10, 2020
Vítor Constâncio, the former vice president of the European Central Bank and current professor at IE University, shares his insights on a historic shift in European fiscal policy. He discusses a groundbreaking 750 billion euro recovery fund meant to support struggling countries and the significant implications for macroeconomic stability. Constâncio also highlights the evolving role of central banks in a crisis, the interplay with fiscal measures, and the challenges posed by inflation in a new economic landscape.
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Europe's Response to the Crisis
- Europe has arguably handled the virus better than the U.S.
- Europe is also finally implementing fiscal stimulus measures.
EU Recovery Fund: A Historic Shift
- The EU's €750 billion recovery fund represents a significant shift.
- It involves joint debt, direct transfers, fiscal stimulus, and aid to struggling countries.
EU's Slow Pace
- The EU’s slow response to crises stems from an initial belief in monetary policy as the primary tool.
- This was coupled with a fear of fiscal irresponsibility and evolving geopolitical factors.