Eurozone economy to shrink by 8% to 12% in 2020 due to pandemic crisis: ECB

European Central Bank (ECB) President Christine Lagarde has reportedly said that the eurozone economy will plummet 8-12% this year because of the coronavirus pandemic. Lagarde reportedly said that the virus has caused a huge economic impact on the Eurozone economy. She added that the bank's mild scenario which estimated a negative growth of 5 per cent was "already outdated". 

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Lagarde further added that she was not so much concerned about the increasing debt levels and said that this is not a new euro crisis. She also highlighted the significance of liquidity. At a European Parliament youth event Lagarde said, "The ECB's mission is to, first of all, be the custodian of this phenomenal asset that we have in common, the euro, our currency". She added, "The mission of our founding members was price stability, that's our primary mission."

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ECB spends  €750 billion

According to the reports,  the Central bank has spent €750 billion ($821 billion) buying government debt and private securities. The bank has claimed that it is prepared to spend even more if necessary. Such a massive increase in the bank's balance sheet is designed to keep financial systems liquid at a time when investors are fearful and the stock markets are extremely volatile.
Central banks around the world have announced emergency stimulus packages in a last-ditch effort to bolster their economies and markets during the time. The European Central Bank in a statement said that it was exploring all options and contingencies in order to support the European economy through this shock. This announcement by the European Central bank comes just days after they had announced that they will be increasing the number of bonds they purchase this year. According to reports, they will buy an additional €120 billion ($134.8 billion) in bonds.

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READ: Eurozone Economy Could Shrink By 5-12% In 2020 Due To COVID-19 Crisis: ECB

(Image Credit: AP)