THE Governor of the Bank of Spain, Pablo Hernández de Cos has said that the European Union needs to take action now to be alert to the financial risks across the EU due to the Covid-19 pandemic.
He suggests that some form of deposit guarantee fund should be created as banks across the 27 member states are likely to see significant bad debts from individuals and companies due to the lack of earnings in 2020.
In addition, he advises commercial banks to prepare by cutting costs, becoming more efficient and increasing their use of new technology as Europe emerges from the restraints of the pandemic.
Many banks have taken sensible precautions by making provisions in their accounts for larger than forecast bad debts and Spain in particular has taken this on board having experienced and learnt from its serious financial difficulties caused by the last financial crisis.
He and other analysts think it unlikely that the Spanish economy will really start to recover until 2022 and the tourism sector which is so important to Spain will need to get back into gear before recovery takes off.
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