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“A pan-European policy response is needed to help the hardest-hit countries in the coronavirus crisis,” European Central Bank (ECB) Governing Council member Klaas Knot said on Tuesday.

Key takeaways

“Any bankruptcy of a solvent, but temporarily illiquid firm, bank or even government is a waste and needs to be avoided if possible.”

“Monetary policy will likely need to continue to play an important role in the recovery phase.”

“ECB policy is directed at maintaining favourable financing conditions for households, firms and governments, to mitigate any amplification.”

“Coronavirus may speed up deglobalisation.”

“Central banks within their mandates stand ready to play their part in mitigating the adverse economic consequences of this global crisis.”

Market reaction

The EUR/USD pair erased its daily losses and turned flat on the day near the 1.0860. However, this rebound seems to be caused by a fresh USD selling-wave rather than the ECB commentary.