isabel schnabel : interview in to vima interview with ms isabel schnabel, member of the executive board of the european central bank, in to vima ( greek daily newspaper ), conducted by mr angelos athanasopoulos and published on 4 april 2020. * * * the ecb recently decided to unleash its firepower once more to protect the euro area economy. the introduction of the €750 billion pandemic emergency purchase programme ( pepp ) is the latest in a series of measures, with the ecb having already announced an additional envelope for its asset purchase programme of €120 billion in net purchases until the end of 2020, on top of the monthly net asset purchases of €20 billion. why was an ad hoc, temporary programme like the pepp needed? the outbreak of the coronavirus ( covid - 19 ) has led to a humanitarian crisis, and has put enormous strain on the euro area economy and the financial sector. over the past few weeks, the outlook for the economy deteriorated sharply as countries had to intensify containment measures, dampening both production and consumption. this posed downside risks to the inflation outlook in the euro area. we also observed a sharp tightening of financial conditions at a time when the economy needed support. signs of financial fragmentation were re - emerging, impairing the transmission of our policy. we responded forcefully to this deterioration in the economic outlook by launching a new temporary asset purchase programme, the pandemic emergency purchase programme ( pepp ), which also includes purchases of greek government bonds. this helps stabilise financial markets, and contributes to much more favourable financing conditions, not least in greece, where interest rate spreads have dropped markedly. what are the main characteristics of the pepp? would you say that it is different from a typical monetary quantitative easing ( qe ) programme? if so, what are the differences? our existing asset purchase programme ( app ) was designed for normal times, providing monetary policy accommodation in order to support the gradual return of inflation to our aim. the pepp is a separate programme. it is our response to the extraordinary economic shock caused by the pandemic. the pepp is temporary, significant in size, and flexible. we expect it to run until we judge that the current crisis is over, but at least until the end of the year. one of the key aspects of the pepp is its flexibility. how do you respond to those who say that

future? in principle, non - financial corporate bonds issued in any euro area country, including greece, can be included in the pepp if they meet the relevant eligibility requirements, including the minimum rating threshold. for the time being, no greek corporate bonds qualify. but i hope that this will change in the future. over the past decade, prudential issues such as non - performing loans ( npls ) have been very challenging to deal with. npls have been one of the main structural problems in the greek banking sector, preventing investment and growth in the greek economy. as the euro area economy is heading towards a recession, which could prove long and deep, a new generation of npls could appear – and not only in greece. how is the ecb planning to deal with such a contingency? will the plans put in place to deal with the current challenge of npls be enough when the coronavirus crisis comes to an end? the crisis will certainly have negative effects on bank balance sheets. but this time, banks are not the cause of the crisis ; they rather have to be part of the solution. and they are in much better shape now, with more capital and a better liquidity position. the supervisory arm of the ecb has implemented significant measures to allow banks to continue to provide funding to firms and households. ecb banking supervision has communicated to banks that it will use maximum flexibility in evaluating the progress of ongoing plans to reduce past npls. it is important that we find the right balance between helping banks absorb the impact of the current downturn and identifying risks, deploy sustainable solutions for viable distressed debtors. only a strong, but at the same time sufficiently flexible, banking system is able to meet the financing needs of people and businesses. christine lagarde has mentioned that aside from what the ecb can and will do, the member states of the euro area should assume their responsibilities on the fiscal side. the esm is exploring various options towards that end, although differences among member states remain. would the ecb consider eurobonds in the form of “ coronabonds ” as a proper way forward in order for the euro area economy to counter 2 / 3 bis central bankers'speeches the economic impact of the virus? and could urgent circumstances lead to the activation of the “ omt bazooka ” being delinked from an eccl programme? these are political decisions, which are not within the ecb ’ s remit. that being said,