EURO ZONE BANKS ARE ABLE TO WITHSTAND THE CONSEQUENCES OF THE PANDEMIC
Experts of the International Monetary Fund believe that due to the sufficient capital of the banks of the euro zone, these European financial institutions will be able to overcome the negative consequences of the coronavirus pandemic. They will continue to finance the recovery of the currency bloc's economies, despite the increased pressure on their capital from sectors that have been particularly hard hit by the pandemic. The fund estimates that their reserves are high enough to survive the crisis caused by the spread of the coronavirus infection and the measures imposed by governments to contain it. The IMF report notes that the euro area banks are sufficiently resilient to the 2020 recession. According to the fund's estimates, European banks will be able to partially recover in 2021. The fund is confident that with continued political support, the total capital ratio will fall to 13.1% from 14.7% by the end of this year. The political support of experts includes the write-off of capital held in banks, a moratorium on debts, as well as credit guarantees and the provision of a deferral in the bankruptcy procedure.
Despite such relatively positive factors, the Euro vs US Dollar (EUR/USD) exchange rate is in a falling trend and is now at 1.1740.