ECB’s Knot: EU recovery fund needs to be temporary and complementary private risk sharing is necessary

The European Union’s (EU) EUR750 billion recovery fund must be temporary, the European Central Bank (ECB) Governing Council member and the head of the Dutch central bank Klass Knot said on Tuesday, adding that complementary risk-sharing through private markets is necessary.

Key quotes

“A Europe that is kept together through large transfers of public funds is vulnerable from a political perspective.”

“The need for complementary risk sharing through private markets remains high.”

“Banks are bound to take a hit from the crisis as their loan books deteriorate, making them difficult to extend credit.”