Former ECB member Benoir Coeure warned Tuesday that certain companies are at risk of becoming insolvent as governments withdraw fiscal support.
In a report out Tuesday, the BIS warned that there are underlying financial fragilities despite some confidence among market participants in recent weeks regarding the reopening of many economies.
Many governments have deployed massive fiscal stimulus to mitigate the economic fallout from Covid-19. In most cases, this has allowed firms to avoid bankruptcy and employees to have a job to return to once lockdowns are lifted. However, as this fiscal stimulus eases and without a fully-open economy, some companies will struggle to keep their doors open.
In a report out Tuesday, the BIS warned that there are underlying financial fragilities despite some confidence among market participants in recent weeks regarding the reopening of many economies. Central bankers were very quick to respond to the crisis and ahead government action. In the U.S., for example, the Federal Reserve cut interest rates in the space of about two weeks in March. In Europe, the ECB designed a new quantitative easing program to keep borrowing costs low.
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