These income transfers – coupled with measures to support firms – have helped avert the destruction of productive capacity that seemed likely a year ago. In fact, the Next Generation EU (NGEU) programme may even increase capacity in the years to come.
Monetary and credit data can therefore offer an important insight into how financial institutions, households and firms have responded to the financial market volatility. Indeed, previous episodes of heightened financial market uncertainty have been associated with large portfolio shifts into safe and liquid monetary assets.