that central banks are simply powerless in this crisis? no, but monetary policy cannot resolve this crisis on its own. we also need a strong fiscal response, ideally at european level. most economists agree that fiscal policy is currently the most important instrument with which to counter the crisis. why? the ecb can provide banks with liquidity, but that doesn ’ t necessarily mean that the banks will actually lend to companies that are struggling because of the virus. that ’ s where the government comes in. it can support the economy by issuing credit guarantees, for example. the package of measures adopted by the german government on friday contained guarantees of that kind. other member states have agreed on similar measures. the fiscal response at the international level hardly looks coordinated. is that a problem? absolutely. we need a strong, joint fiscal policy response in europe. this crisis is not limited to individual member states. everyone is affected, and events in one country affect all other countries too. i hope that this is clear to the decision - makers. in terms of monetary policy, we will do our part to prevent fragmentation in the euro area. the border closures and all the different national arrangements we ’ ve seen suggest that it is more like “ everyone for himself ” at the moment. 2 / 4 bis central bankers'speeches the primary goal has to be to contain the spread of the virus. it may be that closing borders is an appropriate step from that point of view. that ’ s something that virologists are best placed to judge. but it ’ s clear that all protective measures come at an economic cost. and that is precisely why we need coordinated action, so that we can avoid deepening the crisis. but not every country can afford that. that ’ s true, and that ’ s precisely why we need european cooperation. what we need now is european solidarity, also in financial terms. that is in the interest of all european countries. is it even possible now to prevent a recession as a result of the virus crisis? we are experiencing a very severe economic shock. supply chains are being disrupted and, at the same time, demand is contracting as governments introduce protective measures : people are travelling less than before and cannot go out to restaurants and bars. falling confidence may also dampen consumption and investment. and if people are not able to go to work, that has an impact on production, depending on the sector. so we are seeing many different effects emerge at the same time across the whole world.

the likelihood of a recession has thus risen considerably. what is your expectation for economic growth? our latest projections put euro area growth at 0. 8 % for this year. but that is now out of date. we will certainly have to adjust our projection significantly downwards. below 0 %? we don ’ t know yet. the greatest uncertainty is how long the crisis will last. originally, many economists thought that there would be a short, sharp crisis and that things would subsequently pick up again quickly. it very much depends on how quickly the spread of the virus can be contained, but also on the economic policy reaction. you have done intensive research on financial crises of the past. is there any crisis that was similar? the current situation cannot be compared with the 2008 financial crisis. that crisis originated in the financial system. today we are looking at a shock to the real economy that is affecting many countries at the same time and for that reason is so devastating for the global economy. if we want to draw a comparison, we should look at other pandemics. the spanish flu? yes, for example – that pandemic was indeed devastating. the precise figures are not known, but between 20 and 100 million people died back then. now we are in a much better situation. first, medicine is much more advanced. during the spanish flu pandemic, many people died from secondary bacterial infections which can now be treated more effectively. and we are economically in a much better position to deal with a shock of this nature. why? the internet puts a whole range of technical options at our disposal that allow us to continue working. our social security systems are much better. people will only stay at home if they continue to be paid when they get sick. at the same time, there is now more international division of labour than there was back then, so we feel the impact more strongly if supply chains break down. the economy is estimated to have contracted by 6 % at the time of the spanish flu. is this 3 / 4 bis central bankers'speeches virus crisis economically less bad? no - one can say, but we will play our part in containing the economic consequences of this crisis. 4 / 4 bis central bankers'speeches