Draghi deems war-like mobilisation to prevent prolonged coronavirus economic depression necessary

“A deep recession is inevitable,” former European Central Bank (ECB) President Mario Draghi said, echoing expectations of a deep EU and Eurozone recession for 2020, due to the Coronavirus’ impact on the bloc’s economy.
The formed ECB President described the Coronavirus pandemic as a “human tragedy of biblical proportions,” as member-states are recording thousands of confirmed cases, loses and businesses crashed by the economic turmoil.
“The challenge we face is how to act with sufficient strength and speed to prevent the recession from morphing into a prolonged depression, made deeper by a plethora of defaults leaving irreversible damage,” Draghi wrote in an article on FT.
National reponses to the unprecedented health emergency will inevitably lead to a significant increase of public debt, with several EU leaders of highly indebted countries pushing for the issuance of ‘Corona-bonds’, as a means to salvage their economies.
“Much higher public debt levels will become a permanent feature of our economies and will be accompanied by private debt cancellation,” Draghi said, adding that “employment and unemployment subsidies and the postponement of taxes” are key steps already taken by some governments, which should be accompanied by immediate liquidity support.
To this end, the formed ECB President called for the avoidance of bureaucratic delays, as “neither regulation nor collateral rules should stand in the way of creating all the space needed in bank balance sheets for this purpose.” He also highlighted that a “change of mindset”, is deemed necessary, as in times of war.