The European Central Bank (ECB) said on Wednesday that the slow pace of the Covid-19 vaccination in some parts of the world could threaten financial stability, even if the economic recovery is already well underway.
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The ongoing economic recovery, with sustained activity in companies in the euro area, has
"reduced many of our worst fears about economic scars and increased risk of credit
default" in the wake of Covid-19 , says the institution in its semi-annual report on financial stability.
But
"the risks associated with the pandemic have not completely disappeared, in particular because the progress of vaccination has remained slow in many regions of the world"
, continues Luis de Guindos, vice-president of the ECB, in the preamble of the document. .
The virus continues to spread and the epidemic is rebounding in Europe, with a new contamination record of more than 52,000 new cases in Germany on Wednesday, while France surpassed the 20,000 mark on Tuesday.
Thus, with disruptions to be expected on the labor market and demand,
"the pandemic continues to be one of the main risks for future economic growth
,
"
warns the institute.
Threat added to inflation
To complete the picture of threats to the economy, the paper points to
"pressures on the global supply chain and rising energy prices"
which also pose a challenge to the
"inflation outlook"
, the the yardstick on which the ECB bases its monetary policy.
Another warning from the ECB: the
“pockets of exuberance”
in certain markets which have formed thanks to the valuation of financial and real estate assets.
These sectors face a correction risk, as businesses and public finances exhibit
“higher debt levels”
in the wake of the pandemic.
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These bubbles are paradoxically linked to the abundant and cheap money policy pursued for years by the ECB to support activity, and which the institute says it is monitoring closely.
After the conclusion of the COP26 climate conference last week, the ECB is finally calling for
"concerted and timely action"
on climate change that would limit the risks to the financial system.