Monetary policy within a covid-19 environment: The role of central banks and the main challenges for the euro-zone1

Abstract

The last financial crisis in 2008 has weakened the Euro-zone countries. Most of them were deeply affected, and their economic growths have not returned to their pre-crisis rates. Moreover, the inflation rate is still very low despite the European Central Bank’s interventions. Twelve years later, a health crisis occurred. The ECB have reacted to this event by using monetary tools. We can cite for example the famous temporary Pandemic Emergency Purchase Programme (PEPP) to save the Euro-zone countries from a systemic disaster. The current interest rate is negative, and it seems to raise some questions about the efficiency of policies and the threat to economic, monetary, and financial stability. Negative interest rate may also generate the next crisis. This paper is dedicated to recommendations based on the role of Central Banks in the health crisis management and, more generally, environmental crisis management instead of evaluating the impacts of the monetary policies on Eurozone countries because it is too early to measure with acuity the COVID-19 effects.