April 3, 2020
• Extraordinary Board of Directors discussed the EIB Group’s proposed response to economic effects of COVID-19 crisis: a €25 billion pan-European guarantee fund to support up to €200 billion for the European economy• The Board also approved key elements of an emergency measure package announced in March
The Board of Directors of the European Investment Bank (EIB) today discussed the creation of a €25 billion guarantee fund to enable the EIB Group to scale up its support for companies in all 27 EU Member States by an additional up to €200 billion. This comes on top of an immediate support package of up to €40 billion announced in March. The Board prepared the proposal for the guarantee fund for discussion by the Eurogroup on the 7th of April 2020.  
“We need a pan-European response to the pandemic. We need this response to be ambitious and we need it fast,” said EIB President Werner Hoyer. ”Companies throughout the European Union need massive support. They need more credit lines, bridge loans and working capital to overcome this unprecedented challenge. With the backing of the Member States, the EIB Group’s coronavirus response would support financing of up to 1.5% of Europe’s GDP to face this unprecedented crisis, complementing the extraordinary efforts made by the Member States.”
The pan-European guarantee fund would serve as a protective shield for European firms facing liquidity shortages. It could be set up with contributions provided by the Member States and be open to participation by other EU institutions. Building on the EIB Group’s existing guarantee programmes and proximity to the market, the funds could be deployed within a very short time. The scheme would be implemented by the EIB and the European Investment Fund (EIF), which form the EIB Group, in close partnership with national promotional banks, the European Commission and other financial partners. It would create a level playing field for small and medium-sized companies in all Member States.  
The deployment of funds through the EIB Group would ensure that every Member States benefits from the EIB’s AAA rating. The guarantee fund would complement and enhance national packages as.EU Member States are heavily influenced by what happens to overall EU demand and market confidence, intra-EU trade, and supply chains and financial markets. 40% of the positive impact on growth and employment from EU investments are thanks to cross-border spillovers of investments. This makes the EIB scheme genuinely complementary to national measures. The EIB Group will work closely with experts in national authorities, including central banks, to identify where the needs are most pressing.
President Hoyer added: “The guarantee fund would be an effective, timely and truly European response to an unprecedented crisis. We want to fight the economic impact of COVID-19 now by getting ahead of it and relieving the stress on the real economy rather than dealing with fall-out later on. Sharing the burden across Member States avoids adding more debt to those countries that are hardest hit by the crisis and under the highest health expenditure stress.”
The Board also approved a multi-beneficiary intermediated loan (MBIL) of EUR 5bn covering all EU Member States, as part of its emergency response package which aims to rapidly mobilise financing for SMEs and Midcaps in the coming weeks up to EUR 40bn.
In addition, the EIB Group is using existing financial instruments shared with the European Commission – primarily the InnovFin Infectious Disease Finance Facility – to finance projects that work towards halting the spread of the coronavirus, finding a cure, and developing a vaccine. The EIB Group will also support emergency measures to finance urgent infrastructure improvements and equipment needs in the health sector, using existing framework loans or undisbursed amounts from existing health projects. The EIB Group’s current pipeline of projects in the health sector amounts to around €5 billion.
Compliments of the European Investment Bank.

April 6, 2020
The European Commission has unlocked €1 billion from the European Fund for Strategic Investments (EFSI) that will serve as a guarantee to the European Investment Fund (EIF), part of the European Investment Bank Group. This will allow the EIF to issue special guarantees to 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. Today’s announcement fulfils the commitment in the Commission Communication of 13 March to bring immediate relief to hard-hit SMEs, with money able to flow already in April. It is part of the package of measures announced by the EIB Group on 16 March designed to rapidly mobilise support for Europe’s SMEs and mid-caps.
One of the immediate economic consequences of the coronavirus pandemic is the sudden lack of liquidity affecting small and medium-sized businesses. These companies are typically the most affected in a crisis, and it is essential to support them with adequate liquidity so they can survive the crisis. However, in a situation of liquidity crunch banks are not incentivised to lend SMEs money due to the sudden increase in perceived risk. That is why EU guarantees supporting these loans are necessary. As of today, the EIF is offering to the market dedicated EFSI-backed guarantees to contain the impact of the pandemic on small and medium sized enterprises and small mid-cap companies.
European Commission Executive Vice-President for An Economy that Works for People, Valdis Dombrovskis, said: “Across Europe, our businesses are struggling. The EU is responding quickly to help cushion the blow and to help small and medium-sized companies, which are especially vulnerable. Today, the Commission and the European Investment Fund are making available €8 billion in financing, bringing immediate cash relief to SMEs in Europe affected by the coronavirus pandemic. Money will be flowing already this month via local banks and lenders to help those most hard-hit by the crisis.”
EIF Chief Executive, Alain Godard said: “In times of unprecedented crisis it is essential that SMEs receive the support they need. The EIF is working intensively to ensure a swift and adequate response to the COVID-19 virus outbreak and we are pleased to be launching this new €8 billion initiative with the Commission today. While this is an important first step, the EIB Group will continue to work on finding additional solutions to quickly meet the financing needs of entrepreneurs across Europe.”
The €1 billion unlocked from the EFSI under the COSME Loan Guarantee Facility and the InnovFin SME Guarantee under Horizon 2020 allows the EIF to provide guarantees worth €2.2 billion to financial intermediaries, unlocking €8 billion in available financing. The guarantees will be offered through the EIF to the market, via a call for expressions of interest issued today to several hundred financial intermediaries, comprising banks and alternative lenders. Key features of these guarantees will be:
• Simplified and quicker access to the EIF guarantee
• A higher risk cover – up to 80% of potential losses on individual loans (as opposed to the standard 50%);
• Focus on working capital loans across the EU;
• Allowing for more flexible terms, including postponement, rescheduling or payment holidays
The new features will be accessible to new as well as existing financial intermediaries already working with EIF, who will extend special conditions to more than a hundred thousand companies benefitting from guarantees under the COSME LGF and the InnovFin SMEG programmes.
Next steps
Following today’s call for expression of interest, financial intermediaries with existing EIF agreements under these COSME and InnovFin programmes will be able to access the new guarantees immediately upon their request. Other financial intermediaries can access the guarantees following a swift application process. In that way new money can already start flowing to hard-hit businesses in April. SMEs will be able to apply directly to their local banks and lenders participating in the scheme, which will be listed on www.access2finance.eu.
The Commission and the EIB Group will continue to work on additional measures and will use all the tools at their disposal to help contain the coronavirus pandemic and address its economic consequences.
Background
To unlock the €1 billion from the EU budget, the Commission and the EIB Group have made a series of amendments to their specific agreements.
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance. EIF designs and develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.
COSME is the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (SMEs) running from 2014 to 2020 with a total budget of €2.3 billion. At least 60% of the programme is devoted to improving access to finance for SMEs in Europe, with two financial instruments. The COSME Loan Guarantee Facility supports guarantees and counter-guarantees to financial institutions to help them provide more loans and lease finance to SMEs. COSME Equity Facility for Growth helps provide risk capital to SMEs mainly in the expansion and growth stages.
Horizon 2020  is the EU programme for Research and Innovation running from 2014 to 2020 with a total budget of €77 billion. Under Horizon 2020, InnovFin – the EU Finance for Innovators – financial instruments aim to facilitate and accelerate access to finance for innovative businesses across Europe. In particular, the InnovFin SME Guarantee (SMEG) Facility provides guarantees and counter-guarantees on debt financing of between €25,000 and €7.5 million to improve access to finance for innovative SMEs and Midcaps. Under InnovFin SMEG, a facility managed by the EIF, financial intermediaries – banks and other financial institutions – are guaranteed against a proportion of their losses incurred on the debt financing covered under the facility.
The European Fund for Strategic Investments (EFSI) is the financing pillar of the Investment Plan for Europe, which was launched in November 2014 to reverse the downward trend in investment levels and put Europe on the path to economic recovery. Its innovative approach based on the use of an EU budget guarantee provided to the EIB Group enables substantial public and private sector funds to be mobilised for investment into strategic sectors of the European economy. The Investment Plan for Europe has already generated more than €460 billion of investment and supported 1.1 million start-ups and SMEs across Europe. Find the latest EFSI figures by sector and by country here.
Compliments of the European Commission.

April 2, 2020
Highlights
• Financing is guaranteed by the European Fund for Strategic Investments (EFSI) and will help make the sector more resilient in light of Covid-19
• New financing targets investments by private cooperatives and companies in the agriculture and bioeconomy sector
• The EIB programme loan will amount to €700 million and is expected to back close to €1.6 billion of investment across Europe
The European Investment Bank (EIB), the EU bank, announced the launch of a new financing initiative that aims to unlock close to €1.6 billion of investment in the agriculture and bioeconomy sector. The financing aims to support private companies operating throughout the value chains of production and processing of food, bio-based materials and bioenergy. It will be guaranteed by the EU budget under the European Fund for Strategic Investments (EFSI), which forms the financial pillar of the “Investment Plan for Europe”.
The lending programme will enable direct lending for private sector investments ranging from €15 million to €200 million, with the EIB loan amount ranging from €7.5 million to €50 million. Targeted investments will support environmental protection and natural resource efficiency, renewable energy, innovation, competitiveness, and energy efficiency. The programme will contribute to safeguard and create employment in rural areas and therefore promote rural development and territorial integration across the EU.
The programme is a continuation of the first €400 million agriculture and bioeconomy programme loan that was launched in 2018 and is nearly fully committed. The first programme loan generated significant interest in the market with a number of projects originated with corporate and cooperative counterparties in several EU countries (e.g. France, Poland, Ireland, Italy and Latvia).
EIB Vice-President responsible for bioeconomy, Andrew McDowell: “Since the coronavirus pandemic reached Europe the EIB has been fully mobilised with the European Commission to deploy a support plan for the hardest hit SMEs, including those in the agri-food sector. Nevertheless, the EIB’s long-term financing of the sector continues in parallel, with a focus on innovation, climate action, environmental sustainability and rural development. The first €400 million of the agriculture programme loan has already supported 10 transformational investments for European agriculture that have also strengthened rural communities. With this second financing, we are providing an additional €700 million to build on this success and meet market demand.”
European Commissioner for Agriculture Janusz Wojciechowski said: “The coronavirus pandemic affects every single one of us and every single sector. In this dramatic context, I warmly welcome this second step in EIB’s strategy under the Investment Plan to finance measures deploying a support plan for the AGRI-food sector. I am strongly convinced that, this will be a very important and useful instrument in helping the sector remain robust and resilient to overcome the crisis.”
Compliments of the European Investment Bank.

Saving lives and supporting livelihoods in these times of acute crisis is paramount. The Commission is further increasing its response by proposing to set up a €100 billion solidarity instrument to help workers keep their incomes and help businesses stay afloat, called SURE. It is also proposing to redirect all available structural funds to the response to the coronavirus.
Farmers and fishermen will also receive support, as will the most deprived. All of these measures are based on the current EU budget and will squeeze out every available euro. They show the need for a strong and flexible long-term EU budget. The Commission will work to ensure that the EU can count on such a strong budget to get back on its feet and progress on the path to recovery.
The coronavirus outbreak is testing Europe in ways that would have been unthinkable only a few weeks ago. The depth and the breadth of this crisis requires a response unprecedented in scale, speed and solidarity.
In the past weeks, the Commission has acted to provide Member States with all the flexibility they need to support financially their health care systems, their businesses and workers. It has acted to coordinate, speed up and reinforce the procurement efforts of medical equipment and has directed research funding to the development of a vaccine. It has worked tirelessly to ensure that goods and cross-border workers can continue to move across the EU, to keep hospitals functioning, factories running and shop shelves stocked. It has and continues to support the repatriation of EU citizens, their families and long-term residents to Europe from across the world.
In doing this, the Commission is acting on its conviction that the only effective solution to the crisis in Europe is one based on cooperation, flexibility and, above all, solidarity.
Today’s proposals take the response to a new level.
Commenting on the proposals adopted today, President von der Leyen said: “In this coronavirus crisis, only the strongest of responses will do. We must use every means at our disposal. Every available euro in the EU budget will be redirected to address it, every rule will be eased to enable the funding to flow rapidly and effectively. With a new solidarity instrument, we will mobilise €100 billion to keep people in jobs and businesses running. With this, we are joining forces with Member States to save lives and protect livelihoods. This is European solidarity.”
€100 billion to keep people in jobs and businesses running: the SURE initiative
We need to cushion the economic blow in order for the EU economy to be ready to restart when the conditions are right. To achieve this, we must keep people in employment and businesses running. All Member States have or will soon have short-time work schemes to help achieve this.
SURE is the Commission’s answer to this: a new instrument that will provide up to €100 billion in loans to countries that need it to ensure that workers receive an income and businesses keep their staff. This allows people to continue to pay their rent, bills and food shopping and helps provide much needed stability to the economy.
The loans will be based on guarantees provided by Member States and will be directed to where they are most urgently needed. All Member States will be able to make use of this but it will be of particular importance to the hardest-hit.
SURE will support short-time work schemes and similar measures to help Member States protect jobs, employees and self-employed against the risk of dismissal and loss of income. Firms will be able to temporarily reduce the hours of employees or suspend work altogether, with income support provided by the State for the hours not worked. The self-employed will receive income replacement for the current emergency.
Delivering for the most deprived – the Fund for European Aid to the Most Deprived
As most of Europe practices social distancing to slow the spread of the virus, it is all the more important that those who rely on others for the most basic of needs are not cut off from help. The Fund for European Aid to the Most Deprived will evolve to meet the challenge: in particular, the use of electronic vouchers to reduce the risk of contamination will be introduced, as well as the possibility of buying protective equipment for those delivering the aid.
Supporting fishermen and farmers
Europe’s farming and fisheries have an essential role in providing us with the food we eat. They are hard hit by the crisis, in turn hitting our food supply chains and the local economies that the sector sustains.
As with the structural funds, the use of the European Maritime and Fisheries Fund will be made more flexible. Member States will be able to provide support:
to fishermen for the temporary cessation of fishing activities;
to aquaculture farmers for the temporary suspension or reduction of production and provide support;
and to producer organisations for the temporary storage of fishery and aquaculture products.
The Commission will also shortly propose a range of measures to ensure that farmers and other beneficiaries can get the support they need from the Common Agricultural Policy, for example by granting more time to introduce applications for support and more time to allow administrations to process them, increasing advances for direct payments and rural development payments, and offering additional flexibility for on-the-spot checks to minimise the need for physical contact and reduce administrative burden.
Protecting our economy and people with all available means
Redirecting all Cohesion Policy funds to fight the emergency
All uncommitted money from the three Cohesion Policy funds – the European Regional Development Fund, the European Social Fund and the Cohesion Fund – will be mobilised to address the effects of the public health crisis.
To make sure that funds can be re-directed to where they are most urgently needed, transfers between funds as well as between categories of regions and between policy objectives will be made possible. Moreover, co-financing requirements will be abandoned, as Member States are already using all their means to fight the crisis. Administration will be simplified.
The Emergency Support Instrument
The European Union has not faced a health crisis in its history on this scale or spreading at this speed. In response, the first priority is to save lives and to meet the needs of our health care systems and professionals who are working miracles every day right across our Union.
The Commission is working hard to ensure the supply of protective gear and respiratory equipment. Despite the strong production efforts of industry, Member States still face severe shortages of protective gear and respiratory equipment in some areas. They also lack sufficient treatment facilities and would benefit from being able to move patients to areas with more resources and dispatch medical staff to hardest-hit places. Support will also be needed for mass testing, for medical research, deploying new treatments, and for producing, purchasing and distributing vaccines across the EU.
The EU is today proposing to use all available remaining funds from this year’s EU budget to help to respond to the needs of European health systems.
€3 billion will be put into the Emergency Support Instrument, of which €300 million will be allocated to RescEU to support the common stockpile of equipment. The first priority would be managing the public health crisis and securing vital equipment and supplies, from ventilators to personal protective gear, from mobile medical teams to medical assistance for the most vulnerable, including those in refugee camps. The second area of focus would be on enabling the scaling up of testing efforts. The proposal would also enable the Commission to procure directly on behalf of the Member States.
More to come
As the situation continues to evolve, the Commission will come forward with more proposals and will work with the other EU institutions to move forward as quickly as possible.
Compliments of the European Commission.

April 2, 2020
Find out what the European Institutions are doing to mitigate the impact of the Covid19 outbreak, protect people and the economy and promote solidarity.

1. Slowing the spread of the virus
To help limit the transmission of the virus in Europe and beyond, the EU has closed its external borders to non-essential travel, while ensuring essential goods keep moving across the EU through the introduction of green lanes. Additional resources are foreseen for the European Centre for Disease Prevention and Control, which provides rapid risk assessments and epidemiological updates on the outbreak.
2. Providing medical equipment
EU-countries have speedy access to the first ever RescEU stockpile of medical equipment, such as ventilators and protective masks, under the Civil Protection Mechanism. In addition, the EU has set up a huge international tender allowing member states to make joint purchases of equipment and drugs.
3. Promoting research
The EU’s Horizon 2020 research programme is funding 18 research projects and 140 teams across Europe to help find a vaccine quickly against Covid-19. The aim is to improve diagnostics, preparedness, clinical management and treatment.
4. Assuring the EU’s recovery
To help the EU recover from the economic and social impact of the pandemic, the European Commission will come up with a fresh proposal for the EU’s long-term budget for 2021-2027, which will include a stimulus package. The European Parliament has the final word on the proposal.
5. Repatriating EU citizens
More than 10,000 Europeans stranded around the world by the outbreak have been returned home thanks to the EU Civil Protection mechanism.
6. Boosting European solidarity
The European Parliament has backed new rules allowing member states to request financial assistance from the EU Solidarity Fund to cover health emergencies. With the newly broadened scope of the fund, up to €800 million will be made available for member states this year to fight the coronavirus pandemic.
7. Supporting the economy
The European Central Bank is providing €750 billion to relieve government debt during the crisis, as well as €120 billion in quantitative easing and €20 billion in debt purchases. In addition, MEPs voted to make €37 billion from existing EU structural funds available to EU countries to tackle the coronavirus crisis and support healthcare, businesses and workers.
8. Protecting jobs
To ensure employees can keep their job when companies run out of work due to the coronavirus crisis, the Commission has proposed the concept of state-supported short time work (SURE).
9. Safeguarding the internet
With millions of people forced to stay at home, the EU has asked Netflix, Facebook and YouTube to reduce streaming quality to avoid overloading the web. This allows everyone to use the internet, be it for work or for leisure.
10. Protecting the environment and airlines
Parliament has supported the Commission’s proposal to temporarily stop empty “ghost flights”. By waiving the rule that obliges airlines to operate their planned take-off and landing slots to keep them the following season, the EU is ending unnecessary emissions and helping airlines adjust to lower demand.
Compliments of the European Parliament.

March 30, 2020
As a result of the coronavirus outbreak, New York State, New Jersey, and Connecticut have closed nonessential businesses and schools and asked residents to stay home in an effort to slow the spread of the virus. These actions are unprecedented, and the economic impacts are likely to be temporary but severe, and difficult to track and measure. With conditions changing so rapidly, timely data on the economic impacts of the outbreak and resultant policies on businesses and people are both scarce and important. In this post, we provide some very recent information on the economic effects of the coronavirus outbreak in the tri-state region based on responses to a special survey we fielded between March 20 and March 24. The results are striking, though perhaps not surprising: roughly half of the service firms surveyed and well over a third of manufacturers said they have already implemented at least a partial temporary shutdown, and more firms plan to do so in the near future. Further, 40 percent of service firms and 30 percent of manufacturers are reporting staff reductions, and many firms are noting difficulty accessing credit and are concerned about their solvency.
With the coronavirus outbreak affecting businesses in myriad ways, partly through state directives covering local businesses, many firms in the region have curtailed their activities, mostly temporarily. As mentioned, about half of service firms and more than a third of manufacturers have instituted a partial temporary shutdown. Fewer than 10 percent of firms indicated that they have implemented a permanent shutdown, whether partial or full, and the vast majority of businesses surveyed said they are not planning to do so. In terms of the bottom line, 85 percent of service firms and 70 percent of manufacturers indicated that their profits have already fallen since the beginning of March, in many cases substantially.
The magnitude of such disruptions has reverberated through the labor market. As the table below shows, roughly 40 percent of service firms said they have already reduced payroll staff as a result of the coronavirus outbreak, with the most widespread declines reported by leisure and hospitality, retail trade, and health services businesses. Geographically, staff reductions among service firms tended to be most widespread on Long Island, in the Lower Hudson Valley, and in upstate New York; less so in New York City, northern New Jersey, and Fairfield County, Connecticut. Around 30 percent of manufacturers reported staff reductions. In both surveys, similar proportions of firms said they have cut back the hours of existing staff and reduced the number of temporary workers.

We also asked whether and how firms have adjusted work arrangements to adapt to the coronavirus outbreak. More than 80 percent of service firms said they have implemented or expanded telecommuting. About half of those have done so for all staff, with the average service firm indicating that nearly 60 percent of staff are currently telecommuting, and this incidence is highest (75 percent) among New York City firms. However, manufacturers indicated that only about a quarter of their staff, on average, are telecommuting. Further, about half of all firms indicated they have implemented or expanded paid sick/family leave for their workers.
Many firms are concerned about access to credit and maintaining solvency, as shown in the table below. The greatest concern among both service firms and manufacturers is their ability to get adequate credit from suppliers. Maintaining solvency and incurring excessive debt were also fairly widely mentioned as concerns, particularly among firms in the finance industry.

Finally, respondents were asked how they were covering shortfalls in revenues, with results shown in the table below. Drawing down cash reserves was widely mentioned, followed by making increased use of credit lines. A number of respondents also indicated that they are dipping into personal savings, while relatively few are taking out new loans or making a claim on business interruption insurance. Of note, a sizable number of firms commented that business interruption insurance policies would not cover damages resulting from the coronavirus outbreak.

As the coronavirus pandemic unfolds, we will continue to monitor economic conditions in the region and make our results available as quickly as possible. Our next regular monthly business survey reports—Empire State Manufacturing Survey, Business Leaders Survey, and Supplemental Survey—will be released on April 15 and 16.
AUTHORS:
• Jaison R. Abel, Jason Bram, and Richard Deitz
Compliments of the Federal Reserve Bank of New York.

March 31, 2020

Today we face economic upheaval potentially more severe than we witnessed during the global financial crisis. The coronavirus pandemic is a different kind of shock. Never before have modern economies shut down at the drop of a hat. From one week to the next, many workers lost their jobs and paychecks. Restaurants, hotels, and airplanes all emptied. And consumers and businesses now face steep losses in income—and potentially widespread bankruptcies.
Pressure on the banking system is growing and higher defaults on debt are imminent. And many now expect a shock to the financial sector similar in magnitude to the 2008 crisis.

Like the health experts, bank supervisors are responding to a fast-moving and extraordinary situation.

The question on the minds of policymakers is how they should prepare for this.
Just over a decade ago, global policy makers came together in an unprecedented display of coordination to launch the development of a revamped regulatory framework for the financial sector. They significantly raised the minimum standards for the quality and quantity of bank capital and liquidity and succeeded in building a more resilient banking system designed to hold buffers above the minimum that could be safely drawn down in stressed conditions.
In the current crisis, national authorities are taking a host of measures to provide fiscal support, and central banks are opening new liquidity lines. How should bank supervisors respond to ensure continued trust and confidence in the banking system?
Banking system prescription
Like the health experts, bank supervisors are responding to a fast-moving and extraordinary situation. Supervisors must combine the tools from their playbooks for dealing with natural disasters, operational risk events, and bank stress episodes. With its global vantage point, and drawing from past experience, the IMF can offer some additional guidance on the way forward:
• Don’t change the rules. Doing this in the midst of a crisis will likely cause more confusion. Likewise, be prepared to give banks time to meet rules if they fall short, and hold off on implementing new initiatives—banks should remain focused on maintaining ongoing operations, given the increased difficulties of conducting such operations remotely.
• Use the buffers. Regulators have to communicate clearly that capital and liquidity buffers should support continued bank lending, without adverse consequences for bank management. Banks built these buffers well above Basel minimum standards to manage strains on liquidity and revenue loss from missed loan repayments.
• Encourage loan modification. Supervisors should clearly communicate to banks to be proactive in rescheduling their loan portfolio for those borrowers and sectors that have been hard hit by the severe, but temporary, shock. They should also remind banks about flexible credit risk management and the accounting standards for impairment in these situations. Accounting bodies have helpfully stepped in to clarify to auditors how such modifications should be viewed once the economy begins to recover.
• Don’t hide the losses. Banks, investors, shareholders and even taxpayers have to bear them. Transparency helps prepare all stakeholders; surprises only worsen their response, as was proven during the 2008 crisis.
• Clarify regulatory treatment of support measures. Clarifying upfront how banks and regulators should treat fiscal measures, including measures directly targeted at borrowers, credit guarantees, payment holidays, direct transfers and subsidies—beyond any current guidance in the Basel capital framework—would help with overall transparency.
• Strengthen communication. Encourage continuous dialogue between supervisors and banks, especially in this unprecedented situation of working remotely with colleagues, customers, and supervisors. Typically, reporting requirements in key areas, such as liquidity and creditor positions, are enhanced in a crisis, but given operational disruptions, deferring other reporting requirements less material to assessments of financial health may make sense.
• Coordinate across borders. Banking is a global business. Broad coordination among national regulators at the international level is imperative. This crisis will pass eventually, and the effects may take time to dissipate, but preserving the integrity of the international framework will be crucial for the credibility and integrity of the global financial system. International bodies like the Financial Stability Board and the Basel Committee on Banking Supervision are working night and day to do just this.
Will it be enough?
Simply put, it may be too early to tell. At this point, conditions in many countries are as severe as the adverse scenario of the stress tests that banking regulators commonly use to assess the strength of their banking systems.
And it might get worse.
All of this assumes that economic activity could restart later this year, but we have to also consider more adverse scenarios. Under more severely strained circumstances, we will have to rethink our playbook substantially. Some banking systems might have to be recapitalized or even restructured. The IMF has deep experience in helping countries rebuild distressed banking systems through its technical assistance programs, and will stand ready to help.
AUTHORS:• Tobias Adrian and Aditya Narain
Compliments of the IMF.

March 31, 2020
• The IMF’s Executive Board has approved a framework for a new round of bilateral borrowing, to succeed agreements currently in place through end-2020
• This action is part of a broader package on IMF resources and governance reform that will help maintain the IMF’s lending capacity of $1 trillion
• These are critical steps to ensure that the IMF can support its membership through the global pandemic now unfolding and beyond.
Washington, DC – The IMF Executive Board approved yesterday a framework for a new round of bilateral borrowing by the IMF from January 1, 2021, to succeed the current bilateral borrowing agreements (BBAs) currently in place through end-December 2020 . The framework is broadly the same as that agreed in 2016 for the current BBAs. The new BBAs will have an initial term of three years through end-2023, which is extendable by one more year through end-2024. These new agreements will help maintain the IMF’s lending capacity of US$1 trillion for the next few years, ensuring its ability to respond to members’ needs.
The BBAs are the IMF’s third line of defense after quotas and the New Arrangements to Borrow (NAB). Today’s Executive Board decision is part of a broader package on IMF resources and governance reform endorsed by the IMF membership during the 2019 Annual Meetings, and builds on the Board’s January 2020 approval of a doubling of the NAB and guidance on quota reforms.
The new BBAs and the doubling of the NAB are expected to take effect on January 1, 2021, subject to timely approvals by creditor member countries and their institutions. These are critical steps to ensure that the IMF can support its membership through the global pandemic now unfolding and beyond.
Compliments of the IMF.

30 March 2020
Today, the Commission has issued new practical advice to ensure that mobile workers within the EU, in particular those in critical occupations to fight the coronavirus pandemic, can reach their workplace. This includes but is not limited to those working in the health care and food sectors, and other essential services like childcare, elderly care, and critical staff for utilities. Together with the Guidance on the implementation of the temporary restriction on non-essential travel to the EU also issued today, this responds to requests made by EU leaders on 26 March and seeks to address practical concerns of citizens and companies affected by the measures taken to limit the spread of the coronavirus, as well as of national authorities implementing the measures.
While it is understandable that Member States have introduced internal border controls to limit the spread of the coronavirus, it is imperative that critical workers are able to reach their destination without delay.
Nicolas Schmit, the Commissioner for Jobs and Social Rights, said: “Thousands of women and men working hard to keep us safe, healthy and with food on the table need to cross EU borders to go to work. It is our collective responsibility to ensure that they are not hindered in their movement, while taking every precaution to avoid further spread of the pandemic.”
The guidelines published today identify a range of workers that exercise critical occupations, and for which continued free movement in the EU is deemed essential. The list provided in these guidelines is not exhaustive. Examples include health associate professionals, child and elderly care workers, scientists in health-related industries, those needed to install critical medical devices, firefighters and police officers, transport workers, as well as persons working in the food sector. The Commission urges Member States to establish specific burden free and fast procedures to ensure a smooth passage for such frontier workers, including proportionate health screening.
Beyond these specific categories of workers, the guidelines also clarify that Member States should allow frontier workers in general to continue crossing borders if work in the sector concerned is still allowed in the host Member State.Member States should treat cross border workers and national workers in the same manner.
As regards seasonal workers, particularly in the agricultural sector, Member States are asked to exchange information on their different needs at technical level and to establish specific procedures to ensure a smooth passage for such workers, in order to respond to labour shortages as a result of the crisis. Seasonal workers in agriculture perform in certain circumstances critical harvesting, planting and tending functions. In such a situation, Member States should treat those persons as critical workers and communicate to the employers the necessity to provide for adequate health and safety protection.
These guidelines complement the recently adopted Guidelines for border management measures to protect health and ensure the availability of goods and essential services as well as the Guidance on the implementation of the temporary restriction on non-essential travel to the EU which were also presented today.
The Commission will continue to identify the best practices with Member States which can be extended to all Member States for allowing workers to exercise their crucial occupations without undue hindrance.
Background
The coronavirus pandemic has led to the introduction of unprecedented measures across EU Member States, including reintroduced checks at the internal borders.
Frontier workers, posted workers as well as seasonal workers live in one EU country but work in another. Many of them are crucial for their host Member States, for instance for the health care system, the provision of other essential services including the setting up and maintenance of medical equipment and infrastructure, or ensuring the supply of necessity goods. A coordinated approach at EU level is therefore key.
On 26 March, the Heads of State or government stated: “We will urgently address, with the assistance of the Commission, the remaining problems concerning EU citizens blocked at internal EU borders and prevented from returning to their home countries and cross-border and seasonal workers who have to be able to continue essential activities while avoiding further spread of the virus.” These guidelines presented today are the Commission’s immediate response to this call, alongside the Guidance on the implementation of the temporary restriction on non-essential travel to the EU which include the repatriation of EU citizens.
Compliments of the European Commission.