Economy Guindos warns governments that stimulus must be withdrawn carefully...

Guindos warns governments that stimulus must be withdrawn carefully to avoid bankruptcies

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The vice president of the European Central Bank has praised the “very favorable” financing conditions that companies and governments have had

Luis de Guindos It has warned governments of the danger of withdrawing the stimulus, as this could lead to a wave of bankruptcies or insolvencies in companies that could end up infecting the financial sector.

The vice president of the European Central Bank has participated in a meeting organized by IESE in which he has also talked about cryptocurrencies, especially bitcoin, which has “so fragile” fundamentals and, despite this, gets attention and money. In fact, the banker preferred to refer to these currencies as “crypto assets” rather than cryptocurrency.

The former minister has praised the “very favorable” financing conditions that companies and governments have had. According to Europa Press, this, together with the fiscal policy measures, has managed to create “a benign cycle”. In the opinion of the ECB executive, although the fall in GDP “has been enormous”, being able to stop bankruptcies has meant that this crisis has a “limited effect” on banks.

Thus, de Guindos considers that withdrawing these aid and measures is something that must be done “carefully”. Otherwise, the benign cycle you were referring to could turn into a “vicious circle.”

With regard to inflation in the euro area, he acknowledged that its low value is due to “structural factors”. Globalization, demography or e-commerce make inflation move away from the ECB’s target and it believes that it will remain below this target, at least in the short term.

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