Yale School of Management

Posts by EU

EU Expands Temporary Framework For State Aid to Allow Recapitalization

May 14, 2020

On May 8, the European Commission (EC) approved new measures under the Temporary Framework for State Aid, which allow Member States to purchase equity and subordinated debt from non financial companies. The EC will allow recapitalization measures through June 30, 2021, a time period six months longer than other measures under the Temporary Framework.

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EU Programs Supporting non-EU Countries

May 13, 2020

On April 22, the European Commission approved a €3 billion macro-financial assistance (MFA) program to ten neighboring countries outside the European Union for a period of one year to help them cover their immediate financing needs. Like the €20 billion Team Europe strategy announced earlier, this helps demonstrate the EU’s solidarity with other countries in tackling the COVID-19 pandemic.

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Multinational Organizations’ Efforts to Assist Countries through COVID-19 crisis

May 6, 2020

The International Monetary Fund (IMF), World Bank, and other multinational organizations have announced plans to make hundreds of billions of dollars available to emerging markets in response to the COVID-19 crisis. But their own experts have said these funds will probably be insufficient, and they have collectively released only a small fraction of that amount so far.

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EU Proposes Support for Short-Time Work Schemes

April 8, 2020

On April 2, the European Commission (EC) announced a proposal to extend loans to Member States to preserve employment. The Support to Mitigate Unemployment Risks in an Emergency (SURE) initiative would provide loans to Member States to support the creation and expansion of short-time work schemes. It is meant to act as a “second line of defence” to back up Member States’ increased public expenditures. The Council of the European Union (EU) must vote on the SURE proposal before it can take effect.

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ECB Unveils Pandemic Emergency Purchase Programme

March 31, 2020

On March 18, the ECB unveiled a temporary program to purchase up to €750 billion in public and private-sector securities until the “crisis phase” of the COVID-19 crisis is over, but at least until the end of 2020.

The Pandemic Emergency Purchase Programme (PEPP) is an expansion of the ECB’s Asset Purchase Programme (APP), a package of asset-purchase measures that the ECB initiated in 2014 to support monetary policy. The PEPP, like the earlier APP, includes programs to buy sovereign debt, covered bonds, asset-backed securities , corporate bonds, and commercial paper. As with the APP, the ECB will make available for lending any securities that it purchases under the PEPP.

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European Commission Relaxes Rules to Allow Members to Respond Quickly to COVID Crisis

March 25, 2020

On March 19, 2020, the European Commission (EC) said it has relaxed its State Aid rules to allow European national governments to respond quickly to the coronavirus crisis.

In general, the EC’s State Aid rules seek to prevent EC member governments from using state aid to give their countries’ businesses a competitive and unfair advantage. The “Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak” recognizes that its member governments need to work together to mitigate the impact of COVID-19 on the European economy. The framework will be in place through the end of December 2020, although the EC can extend it if necessary. 

The EC adopted a similar temporary resolution during the Global Financial Crisis in 2008.

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UK, EU Move to Ease Impact of Accounting Rules for Borrowers Affected by COVID-19

March 21, 2020

On March 20, the Bank of England and European Central Bank (ECB) provided guidance to banks on how to follow accounting rules in evaluating loans to borrowers affected by the COVID-19 crisis.

 The new IFRS 9 accounting standard, implemented in most of the world outside the U.S., requires banks to set aside loan loss allowances against all future expected losses for loans to borrowers who are categorized in high-risk groups. For borrowers in the low-risk group, the standard only requires banks to set aside allowances for 12 months of expected losses.

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