In fact, financial sector supervisory authorities in many countries have extended the regulatory relaxation period for delays in principal and interest installment payments, thereby providing concessions for the recognition of non-performing loans (NPLs) in the banking industry. The problem of corporate damage and its impact on financial institutions and financial system stability still needs to be observed during the ongoing Covid-19 pandemic.
Otherwise, the single monetary policy of the euro area might not be suitable, thereby bearing the risk of boom-bust cycles and high inflation volatility in the country concerned. All this underlines the importance of a credible euro adoption strategy.