HELSINKI (Reuters) - European Central Bank policymaker Olli Rehn called on Wednesday for member states to enhance pan-European cooperation and for governments to take measures to support the economy amid the coronavirus pandemic.
“The difficulties caused by (the virus) are not due to any single country’s reckless management of finances. It is therefore necessary to support the most severely hit countries,” Rehn, who is Finland’s central bank chief, told a news conference.
Rehn said the ECB’s governing council would do everything necessary to ensure supportive financing conditions.
“We will continue to monitor the situation and stand ready to adjust all of our measures, as appropriate,” he said.
Rehn said it looked likely that the world economy would contract at least as much as during the 2008 financial crisis, and more abruptly.
“Over half the members of the International Monetary Fund have approached the Fund for emergency financing,” Rehn said, adding that had never happened before.
Finland’s government has been reluctant to support so-called corona bonds, or any joint liabilities between eurozone member countries.
“A joint solution is likely to be found better by using the (EU) budget framework rather than through joint loans,” Rehn said.
Rehn said Finland, too, was on the verge of a recession. Earlier this month, the Bank of Finland estimated the economy would contract between 5% and 13% this year due to the coronavirus outbreak.
“Joint European solutions are also in Finland’s interest because our own economy, too, is highly dependent on the European economy’s development and recovery. Alone we can boost our domestic demand but not exports,” Rehn added.
