Above all, there was a danger that the financial sector might become impaired and that this could make the severe slump in the real economy even worse. As the financial crisis taught us, such a negative feedback loop could seriously impede price stability in the medium term. In order to avert this, monetary policy action was needed.
Providing banks with an ample supply of liquidity, coupled with low interest rates, helps to ensure that the economic crisis is not further aggravated by the financial system. And, indeed, the ECB Governing Council adopted a broad set of measures, including asset purchases, long-term central bank loans and collateral framework adjustments.