When and how to unwind COVID-support measures to the banking system?

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Series Details PE 659.646
Publication Date March 2021
ISBN 978-92-846-7857-0
EC QA-05-21-026-EN-N
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Designing exit strategy requires judgment, coordination among different institutions, and graduality. Restoring banks’ balance sheet transparency is a first-order objective. To this end, borrower relief measures should be phased out ahead of the other measures. Relaxation of loan classification and provisioning policies can be lifted in a second stage. The last one to be unwounded would be capital relief initiatives. To provide banks time and space of manoeuvre, exit strategies needs to be communicated in a clear and timely manner.

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This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).

Source Link https://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL_IDA(2021)659646
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  • https://www.europarl.europa.eu/RegData/etudes/IDAN/2021/659646/IPOL_IDA(2021)659646_EN.pdf
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