ASSESSMENTS

EU Banks Aren’t Out of the Woods Yet

MIN READAug 11, 2021 | 17:27 GMT

The national flags of the European Union’s 27 member states are seen in the European Council headquarters in Brussels, Belgium.

The national flags of the European Union’s 27 member states are seen at the European Council headquarters in Brussels, Belgium.

(LUDOVIC MARIN/AFP via Getty Images)

COVID-19’s long-term impact on the EU economy and the lack of a consensus on a bloc-wide banking union mean European banks remain vulnerable, despite extensive institutional and national measures to avoid a banking crisis. Since the onset of the pandemic in early 2020, EU institutions and national governments have implemented several measures to assist the bloc’s banking sector and ensure the availability of credit to companies across the Continent, which has prevented a banking crisis despite the severity of the recession. The measures include cheap liquidity and funding guarantees for banks, softer regulations and the creation of emergency funds for business lending....

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