marja nykanen : how can banks help covid - 19 resilience and recovery? keynote speech by ms marja nykanen, deputy governor of the bank of finland, at the sustainable investment forum europe 2021, virtual, 22 april 2021. * * * ladies and gentlemen! it is an honour to be invited to give this keynote speech on such an important topic in such an interesting forum. last spring, giving a virtual keynote speech in an online conference was something new and exciting. today, over a year later, it is not like that anymore. hopefully, it won ’ t be too long before we get back to a bit more of a normal situation again. today, in this virtual contribution, i will be talking first about the reaction of the authorities to the economic shock from the covid - 19 pandemic. then i will talk about how banks have been a part of the solution. finally, i will conclude by looking at the future and talk about how increasing the role of the capital markets can help to increase the resilience of the eu economy. central banks, supervisors and public authorities support bank lending in the early spring of 2020, the effects of covid - 19 started to become clearer, and, for a brief moment, it seemed as if the economy would go into freefall. however, the public authorities responded swiftly and decisively in order to minimize the social and economic costs of the pandemic and the lockdowns. central banks were among the first responders, with the ecb pandemic emergency purchase programme, pepp, now standing at 1, 850 billion euro. in addition, the ecb has been offering a significant amount of financing to banks through targeted longer - term refinancing operations. fiscal authorities around the world made emergency payments and gave support for companies and households. the eu even reached an agreement where the eu itself would secure 750 billion euro from the markets and distribute it among the member states. in addition to direct financing, countries in europe made changes to insolvency laws to prevent companies going bankrupt. in several countries a moratorium was put in place to help households and companies with debt repayments. furthermore, public guarantees were extended to bank loans to ensure that companies could attain credit. supervisors used the flexibility built into the legislative framework and relaxed the available capital buffers, further enabling banks to keep lending. and these are just some of the examples of how the public sector has supported the economy amid co

##sper in the context of a deepened and completed economic and monetary union. building on this political consensus, the greek authorities must pursue the remaining reforms forcefully in order to improve the investment climate, take full advantage of the brighter global prospects and put the economy on a sustainable growth path. such policies will address the three stock imbalances that remain ( high unemployment, high public debt and a large volume of non - performing loans ), attract foreign direct investment and facilitate the reallocation of productive resources towards tradable and exportable goods and services. this, in turn, will boost financial markets ’ confidence about the prospects for the greek economy and will signal the exit from the crisis. nevertheless, despite the progress achieved so far, we still have some way to go in order for greece to tap the financial markets on sustainable terms after august 2018. this will happen if the country can achieve a credit rating enabling it to refinance its debt at interest rates compatible with debt sustainability and if banks have appropriate and adequate collateral to have full access to the ecb ’ s refinancing operations ( and not only to ela ). to this end, the reform effort has to be stepped up to close the third review. adequate and timely specification of the medium - term debt relief measures in the context of the decisions taken in the eurogroup is also necessary, as is constructive dialogue between the greek government and the institutions on the type of support for the greek economy after the end of the programme in august 2018. in this way, we can ensure a return to financial normality after seven years of significant sacrifices by the greek people. sources : draghi, mario, 2017. introductory statement, www. ecb. europa. eu / press / pressconf / 2017 / html / ecb. is170907. en. html september. draghi, mario, 2017. building on the achievements of post - crisis reforms, 21 september. www. ecb. europa. eu / press / key / date / 2017 / html / ecb. sp170921. en. html draghi, mario, 2017. youth unemployment in the euro area, www. ecb. europa. eu / press / key / date / 2017 / html / ecb. sp170922 _ 1. en. html september. draghi, mario, 2017. introductory statement. hearing of the committee on economic and monetary affairs of the european parliament. www. ecb. europa