taking the last of my three adjectives. the economic policy response in this second phase of the crisis naturally, the economic policy response to this crisis should adapt to how the pandemic unfolds healthwise. at this second phase of the crisis, with the characteristics i mentioned, the economic policy response must combine two objectives : to support the recovery - which advises avoiding a premature withdrawal of the support measures that would raise the risk of economic growth undergoing more lasting damage - and to smooth the adjustment of the economy to the post - pandemic scenario. the importance of european support to achieve these objectives, the economic policy response in this second phase of the crisis should have the firmly resolute backing of the european union ( eu ). indeed, given the enormous economic and financial interactions across the area ’ s various economies, joint action is the most effective means of ensuring that the economic effects of the pandemic will be overcome in a shorter time and at a lower cost to each and every country. this is particularly important in the current situation, where we face a global crisis, but which is exerting asymmetrical economic effects on the different countries. european action is particularly important so as to avoid an uneven exit from the crisis that bears down on overall economic growth for a longer period. these arguments, beyond those relating to necessary european solidarity, highlight the importance of the agreement reached by the european council last tuesday with the approval of the european recovery fund. in fact, as you know, the result of the european council meeting some days back was, i would venture to say, most satisfactory. first, agreement was reached on the eu multiyear budget for 2021 - 2027, the negotiations for which had faced many difficulties in recent months, for an amount of €1, 074 billion. further, a recovery fund ( next generation eu ) has been created. this is additional to the budget and introduces a pan - european recovery financing framework that is unprecedented in the history of the eu. this fund will be financed by the european commission ’ s recourse, on behalf of the union, to the capital markets, for a maximum amount of €750 billion between 2021 and 2026, i. e. it is temporary in nature. the funds will be assigned to tackle the consequences of the covid - 19 crisis, both through loans to the member states ( 48 % of the total ) and through direct transfers ( essentially the remaining 52 % ). the gradual amortisation

contracts and, at times of uncertainty, they would provide a safe haven for investors without triggering financial fragmentation. currently, the supply of risk - free assets in the euro area is very limited, as only the debt of a small group of countries is perceived as riskless. admittedly, a common safe asset cannot replace sound fiscal policies in the member states. but it would weaken the doom loop between sovereigns and banks by reducing incentives for cross - border flights to safety, by contributing to diversification of risk in portfolios held by banks and investors, and, more generally, by providing for a more ample, stable and equitable supply of safe assets for the emu as a whole. a true capital markets union will also attract global institutional investors, strengthening the international role of the euro and providing europe with more geopolitical leeway. crucially, it will help reshape capital markets in europe after brexit. thank you. see p. hernandez de cos ( 2019 ) : " the emu at 20 : from divergence to resilience ”. opening remarks at the banco de espana third annual research conference. https : / / www. bde. es / f / webbde / gap / secciones / salaprensa / intervencionespublicas / gobernador / arc / fic / hdc160919en. pdf