MNI BRIEF: ECB FSR: EZ Policies Boosting Growth By Annual 3pps

Policy measures from central banks and governments across the euro area have helped both maintain bank lending capacity and reduce the risk of severe financial instability, the European Central Bank's latest Financial Stability Report says.

Enhanced monetary policy, increased fiscal programs and adjustments to macro-prudential policies have all acted in sync, the report said, with the combined actions significantly helping improve economic growth in both 2020 and 2021, pointing to enhanced growth of around 3 percentage points in each of the two years from the measures.

Of concern is the fact that there is a 'cliff-edge' at the end of 2021 when much of the support ends, although there is a nod to extending some of the support measures. "Overall, there are substantial short-term risks associated with the withdrawal of policy support, while medium-term risks of protracted policy support should also not be ignored," the report says.