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

all. the cmu would also allow banks to attain funding, securitize their loans and sell them to investors. this could have the potential to distribute risks more evenly across countries, thus absorbing future shocks. furthermore, active capital markets require banks to act as intermediaries, thus it could provide stable or even a countercyclical source of revenue for banks. it is also critical that we build back better after covid - 19, focusing on environmental sustainability and helping the eu and member states to transition to climate neutrality by 2050. the capital markets would enable different types of green instruments to be developed to help towards this goal. and, as the current crisis has shown, there are ample opportunities for member states and the eu to issue social bonds that can help to build more inclusive and equitable societies. efficient and liquid capital markets could provide a solid foundation for extending this. to conclude the public authorities ’ role in helping society cope with the economic impacts of the covid - 19 pandemic has been significant. most eu banks have understood the gravity of the situation and have continued to provide funding to households and companies while at the same time preserving prudent capital positions. going forward, we need to increase the role of the capital markets to enhance the resilience of our economies. for this we need the cmu, which could help the eu to become socially, 2 / 3 bis central bankers'speeches environmentally and economically more sustainable. i think it is a goal worth pursuing. 3 / 3 bis central bankers'speeches