irish bank ). the national authorities also felt that it would not be necessary to use all of the €35 billion pencilled - in to the loan agreement for bank recapitalisation. the capital required as a result of the aggressive pcar 2011 stress test of march 2011 was met with about a half of that, thanks in part to the bail - in of subordinated debt holders. without access to the private financial markets, the irish government would have had to constrain spending suddenly and drastically. in addition, without support from the ecb it would not have been able to continue in the euro. bis central bankers ’ speeches fact 3 : “ the eu and imf insisted that the programme would not contain a bail - in of senior bank creditors. ” many involved imf staff had envisaged a partial haircut on senior debt, but they were not supported when a majority of finance ministers of the g7 decided that bail - ins of senior bank bonds was a bad idea. ( attitudes subsequently changed : bail - in later became an emphasis of eu resolution policy ). irish officials had already been exploring whether and how it might be possible, post - guarantee, to bail - in remaining unguaranteed senior bondholders of anglo and inbs. they could have continued to plan for this and – who knows – might possibly have been able to do so during 2011 had the matter not already been raised abortively at the time of the bailout negotiations in november 2010, thereby pre - emptively sensitising some of the lenders to the issue. ( admittedly, though, “ fact 4 below suggests that this notion may be somewhat fanciful. ) fact 4 : “ the lenders again refused in march 2011 to countenance bail - in of senior bondholders of the failed banks anglo and inbs. ” while bail - in was not part of the programme, the irish authorities had not undertaken that the old unguaranteed debt of the failed banks would be repaid, but was strongly discouraged from keeping the bail - in option publicly on the table at the time of the announcement of the stress test results of march 2011. although the amounts involved here at that stage were less than €5 billion ( or about 3 % of gdp ), this widely known episode is the one hardest to rationalise, even taking account of the persistent stress in european banking market conditions at the time. myth 4 : “ the eu partner countries used the crisis to leverage irish policy

contain the virus become available. two alternative scenarios serve as an illustration of the wide range around the baseline scenario. the mild scenario assumes that the virus is successfully contained in the post - lockdown transition period and there is no resurgence in infections. thus, the economy recovers gradually towards normal levels of activity. in contrast, the virus makes a strong resurgence under the severe scenario and strict lockdown measures are therefore extended. these are assumed to be more damaging to economic activity than under the baseline scenario with lower real gdp growth and more subdued inflation. it is worth noting that the effect of the pandemic on inflation 1 / 6 bis central bankers'speeches dynamics is ambiguous due to competing effects, which could cause inflation to increase or decrease. the downturn in the economy will result in substantial economic slack, which would tend to weaken inflation dynamics. but the pandemic has also caused supply chains to be constrained and this may continue, which would tend to drive prices up. overall, it is likely that that the substantial economic slack will dominate and result in weak inflation dynamics over the medium - term. ( figure 4 : eurosystem staff macroeconomic projections – scenarios ) in general, the eurosystem baseline projections for growth are below those of other forecasters2 with the exception of the oecd forecasts that were published on wednesday. all forecasters acknowledge the prevailing very high levels of uncertainty. the oecd produces two scenarios. in their “ single - hit ” scenario, the current containment measures are assumed to be largely successful in containing the outbreak allowing a gradual recovery in growth and employment over the remainder of this year and in 2021. in the “ double - hit ” scenario, there is a second peak of infections in the autumn. the level of gdp in 2021 in the ecb baseline scenario is roughly the same as the oecd ’ s “ single - hit ” scenario. * * * the june monetary policy decision this provided the context to last week ’ s meeting where i joined my colleagues on the governing council of the ecb for one of our regular meetings where we set monetary policy for the euro area. we took a number of decisions to ensure that the stance is appropriate to achieve our price stability objective over the medium - term. these decisions reflect the unprecedented downturn in the economy and the deterioration in the outlook for growth and inflation. the monetary policy stance must maintain favourable financing conditions for all sectors of the economy and across countries. firm demand for credit is particularly strong now given