April 8, 2020 / 8:01 PM / 2 months ago

ECB's Lagarde calls for greater European solidarity amid coronavirus crisis

FRANKFURT, April 8 (Reuters) - Europe needs to show greater solidarity in its fight against the coronavirus, European Central Bank President Christine Lagarde said on Wednesday, as the bloc’s leaders remain deadlocked about a common response.

“Full alignment of fiscal and monetary policies – and a level playing field against the virus – is the best way to protect our productive capacity and employment,” Lagarde said in an editorial to be published in several newspapers. “Solidarity is in fact self-interest.”

Finance ministers failed to agree in all-night talks on more support for their coronavirus-hit economies and suspended talks until Thursday amid a standoff between financially ailing southern European Union states led by Italy and richer northern countries, such as the Netherlands and Germany.

“It is vital that the fiscal response to this crisis is undertaken with sufficient force in all parts of the euro area,” Lagarde said. “Governments need to support each other, so that they can together deploy the optimal policy response against a common shock for which none is responsible.”

Warning that ordinary workers are now facing the greatest threat since the 1930s, Lagarde said it was vital to prevent viable firms from folding and their employees from losing their jobs.

“To avoid lasting damage, we need to ‘put the economy on hold’, keeping it as close as possible to its pre-outbreak state,” Lagarde added.

Having unveiled a string of stimulus measures since the start of the crisis, Lagarde said that various ECB loan facilities could provide banks with 3 trillion euros worth of liquidity at rates as low as minus 0.75% so they can pass the cash onto firms. (Reporting by Balazs Koranyi Editing by Chizu Nomiyama)

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